Indonesia House of Reps' decision on fuel price unclear

The Business Desk in Jakarta/The Jakarta Post
Asia News Network

Jakarta (The Jakarta Post/ANN) - Indonesia's House of Representative's decision on fuel prices confused the government, Finance Ministry acting chief for fiscal policy Bambang Brodjonegoro said on Saturday.

He said that the contentious article in the revised 2012 state budget passed last night would make it difficult for the government to come to an immediate decision.

The House had agreed to revise the 2012 state budget on early Saturday, allowing the government to raise subsidized fuel prices if the Indonesia Crude Price (ICP) is 15 percent higher than assumed in the state budget within six months.

The government had previously proposed an increase of subsidized fuel prices to 6,000 rupiah (65 US cents) per liter as of April 1.

"Not now, not tomorrow, not in the near future," Bambang said when asked about when the price would be raised.

According to Bambang, fuel subsidies could surge to 50 trillion rupiah (US$5.45 billion) if there were no increase in subsidized fuel prices. What was more concerning, he added, was the possible swelling of subsidized fuel consumption.

Subsidized fuel consumption reached 41.9 billion liters in 2011 up from from 40.4 billion liters as planned.

According to Bambang, however, price disparities between subsidized and non-subsidized fuels at that time were not as significant as those in March.

"A wider price differential leads to a greater volume of fuel consumption," Bambang said.