Govt Still Providing Subsidy For Gasoline

Jakarta, Nov 18 (Antara) - Premium gasoline price has been raised to Rp8.5 thousand per liter, but its economically viable price in November reached Rp9.2 thousand per liter, which means the government still provides Rp700 subsidy per liter, noted Pertamina. Marketing and Commercial Director of state-owned oil company Pertamina Hanung Budya stated here on Tuesday that the economically viable price of Rp9.2 thousand was calculated on the basis of the October Mean of Platts Singapore (MOPS) crude oil pricing system. "The government uses the October basis to substitute the subsidy to Pertamina in November," Hanung noted. He stated that based on the MOPS in October, the price of premium gasoline was US$96 per barrel. With the rupiah exchange rate at Rp12.1 thousand per US dollar, the economically viable price of premium gasoline is Rp9.2 thousand per liter. This means that the government is still providing a subsidy of Rp700 per liter after it raised the price from Rp6.5 thousand to Rp8.5 thousand per liter. On November 1-15, 2014, premium gasoline`s average MOPS price dropped to US$90 per barrel. "The MOPS price is going down, but subsidy still remains, and it will depend on the rupiah exchange rate," Hanung added. If the MOPS price is calculated for a one-year period, it will still be over US$100 per barrel, according to Hanung. Indonesian President Joko Widodo (Jokowi) announced the increase in subsidized fuel oil prices that came into effect from 12 a.m. local time or early Tuesday (Nov. 18, 2014). On Monday night, the government decided to raise the price of subsidized premium gasoline to Rp8.5 thousand from Rp6.5 thousand per liter and the price of subsidized diesel oil to Rp7.5 thousand from Rp5.5 thousand per liter. The price of kerosene, however, remains unchanged at Rp2.5 thousand per liter. Finance Minister Brojonegoro revealed that the increase in the price of subsidized fuels reduced the government`s fuel subsidies by Rp100 trillion per annum. It is expected that the hikes in fuel prices will increase the inflation rate to two percent. The government will divert the subsidy to finance infrastructure, education, and health projects and to provide security to 15.6 million families from backward economic classes.