Nearly 40% of subsidized fuels have been consumed

The consumption of subsidized fuels may exceed the government?s target of 39 million kiloliters this year as 36.6 percent of the target has been consumed during the past five months, Kompas reported on Tuesday.

Finance Minister Sri Mulyani Indrawati said during a hearing with the budgetary commission of the House of Representatives (DPR) on Monday that the government would further curb the growth in fuel demand so that the rise in the fuel subsidy as the result of the rise in crude oil in the international market would not severely affect the 2008 state budget.

?If the domestic fuel prices are equivalent to 30 percent of the overseas prices, the fuel demand will increase 1.1 million kiloliters,? she said, adding that the rise in the fuel demand could be reduced only if the domestic fuel prices are increased.

The minister said that if the consumption of subsidized fuels reached 35.5 million kiloliters, the fuel subsidy would reach Rp 126.8 trillion this year. ?However, if the consumption of the subsidized fuel totaled 39 million kiloliters, the subsidy would reach Rp 132.1 trillion,? Mulyani said.

The price of the Indonesian crude oil averaged US$104.8 per barrel during the period between January and May, exceeding the price reference of US$95 per barrel stated in the 2008 state budget.

At present, the crude oil price in the international market has reached about $120 per barrel. It means that the rise in the fuel subsidy might be higher during the second semester of this year. (*)