Oil price reference for state budget to be increased

Members of the House of Representatives (DPR) have proposed to increase the crude price assumption for the 2005 state budget to between US$26 and $27 per barrel from $22 per barrel in the current budget, Koran Tempo reported on Thursday.

Abdullah Zaini, the chairman of the House's budgetary commission, said in Jakarta on Wednesday that the increase in the crude oil price assumption would result in an increase in the subsidy for the domestic sales of fuel to Rp 17 trillion from about Rp 13 trillion in the current budget.

"But the higher price assumption would be much more realistic given the latest trend of the crude oil price in the world market," he said. The increase in the average crude oil price to between $30 and $32 per barrel during the first months of this year gave the government a leeway to increase the price assumption for the 2005 state budget, he added.

According to him, the oil price in the world market would remain higher during the first semester of this year due to continued uncertainty in Iraq.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro had said the government would likely revise the crude price assumption which was set at US$22 per barrel at the 2004 state budget to up to US$25 per barrel at the 2005 state budget to take the advantage of higher crude oil prices in the world market. (*)