Govt to speed up energy conversion program to cut subsidy

The government has decided to speed up the program to convert the use of highly subsidized kerosene with liquefied petroleum gas (LPG) in order to curb the rise in the subsidy following the sharp increase in the crude oil prices in the world.

 

Vice President Jusuf Kalla said in Jakarta Monday that the energy conversion program would be sped up so that all the households in the country would use LPG by 2010 or two years ahead of the initial schedule of 2012.

 

He said that the rise in the crude oil prices would severely affect the state budget because the surge in the oil prices would also result in the increase in the government's oil subsidy especially those given to kerosene sold to households.

 

"With the current price level, the market price of kerosene has already reached Rp 7,000 per liter. If the crude oil prices reach US$100 per barrel, the subsidy for kerosene would reach Rp 5,000 per liter," he said.

 

According to him, the kerosene to LPG program has been running smoothly, covering about 26 percent of 6 million households targeted in the program. Kalla said he was optimistic that the program would cover about 5 million households this year or about 80 percent of the target.

 

The government began the energy conversion program in 2007. According to the plan, the program is expected to be able to replace the use of 1.12 million kilo liters of kerosene with 645,000 tons of LPG by 2012.

 

The government hopes to be able convert 10 million kilo liters of kerosene with 5.71 million tons of LPG. (godang)