House approves new oil reference price

Members of the House of Representatives (DPR) have approved the government's proposal to increase the reference of oil prices used to calculate oil export earnings in the state budget to US$20 per dollar from the initial $18 per barrel.

Abdullah Zaini, the vice chairman of the House's budgetry committee, said in Jakarta on Friday that the rise in the oil reference price would increase the state revenue target from the oil sector to about Rp 2.3 trillion.

"The receipts from oil exports will increase by Rp 1.3 trillion for every one dollar increase in the reference price," he said following a meeting with Minister of Finance Bambang Sudibyo.

He said that the higher gain from the rise in the oil reference price would be used to help cover the deficit in the Jan-Dec budget, which was expected to reach Rp 46 trillion.

Zaini said that the House members and the government had yet to approve the government's proposal to increase the price of domestic fuel sales by 20 percent beginning April.

"Negotiations about the planned fuel price hike will be continued tomorrow (Saturday)," he said, adding that both the government and House negotiation teams were still calculating how much the government should spend for oil subsidy in the nine-month state budget.

"The budgetary committee wants a reduction in the fuel subsidy by about Rp 2 trillion to Rp 22 trillion from the proposed Rp 24 trillion. The Rp 2 billion could be used to finance other sectors in the budget," he added. (*)