Subsidized oil price much lower than economic price: minister

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The retail price of subsidized fuel oil is currently much lower than its economic price, Finance Minister Sri Mulyani Indrawati has noted.

Assuming Indonesian Crude Price (ICP) of US$105 per barrel and rupiah exchange rate of Rp14,700 per US dollar, the government has issued a considerable subsidy for Pertalite, diesel, Pertamax, and 3-kg LPG, she said at a press conference on the follow-up to the results of the Coordinating Ministry for Economic Affairs’ meeting on the fuel oil subsidy, here on Friday.

The retail price of diesel, set by PT Pertamina with the government’s permission, is Rp5,150 per liter, while its economic price has reached Rp13,950 per liter, she pointed out.

“This means that the community and the entire economy receive a diesel subsidy of 63 percent or Rp8,800 per liter of the actual price,” Indrawati said.

Meanwhile, the retail price of Pertalite has been set at Rp7,650, while its economic price has reached Rp14,450 per liter. Thus, the government is providing a subsidy of up to Rp6,800 per liter on the fuel.

“At the current price of Pertalite, people get a 53-percent subsidy for every liter, or Rp6,800 per liter purchased,” the minister observed.

She said that the retail price of Pertamax is currently pegged at Rp12,500 per liter, while its economic price is Rp17,300 per liter. Thus, the government is providing a subsidy of up to Rp4,800 per liter for the fuel.

“Every affluent person who has a good car buys Pertamax; each liter, they get a subsidy of Rp4,800,” she noted.

Meanwhile, the retail price of the 3-kilogram LPG is currently set at Rp4,250 per kilogram, while its economic price has reached Rp18,500. Thus, the government is providing a subsidy of up to Rp14,250 per kilogram for the fuel.

“So, every time they buy 3 kilograms of LPG, they get a subsidy of Rp42,750,” Indrawati added.

This year, the fuel and LPG subsidy budget has reached Rp149.4 trillion, and electricity subsidies Rp59.6 trillion. Then, compensation for fuel has reached Rp252.5 trillion and compensation for electricity Rp41.0 trillion.

Thus, the total budget for subsidies and compensation has reached Rp502.4 trillion. This number could soar to Rp698 trillion, or increase by Rp195.6 trillion, if the current consumption rate persists.

Source: Antara News