Govt urged to focus price hike on industrial, automotive diesel fuel

President of the state-owned oil and gas company Pertamina, Baihaki Hakim said that the government should focus its price hike policy in 2002 on industrial and automotive diesel fuel because the domestic price of the commodity had been relatively low compared to the international price, and had not been greatly used by the people.

Baihaki said that the domestic price of the industrial and automotive diesel fuel was currently at Rp 950 per liter, which was only 40 percent of the current international price of Rp 2,100 per liter.

He said this price differential had caused massive smuggling of the fuel product to outside the country.

He said that the government would increase the price of the commodity to at least reach 70 percent of its international price.

Baihaki said that a large price differential also can be seen in kerosene commodity, but since the commodity was still being largely consumed by the lower income people, the subsidy on the product could still be maintained for another 10 years.

The government plans to raise the price of fuel products by an average of 30 percent, possibly starting early next year in a bid to ease the burden of the state budget, and create a more efficient economy.(Arry)