Govt may hike fuel subsidies for 2005<\/p>\n
Dadan Wijaksana, Jakarta<\/p>\n
The government has proposed an increase in the fuel subsidy in
\nthe 2005 state budget to Rp 22.07 trillion (about US$2.39
\nbillion), which will be allocated primarily for kerosene.<\/p>\n
However, the amount, up from Rp 14.5 trillion set aside this
\nyear, is not yet final depending on deliberation process of the
\nbudget draft by the House of Representatives' budget committee,
\nwhich on Monday was still in its early stages.<\/p>\n
Deputy marketing manager at state oil and gas company PT
\nPertamina Rachmat Dradjat told reporters following a closed-door
\nmeeting with the committee that the higher subsidy was based on
\nthe assumption that fuel demands next year will increase and oil
\nprices will also be higher.<\/p>\n
The draft of the 2005 state budget assumed an average oil
\nprice of $24 per barrel, compared to the $22 per barrel
\nassumption in the current state budget.<\/p>\n
Fuel consumption next year is assumed to increase to 61.95
\nmillion kiloliters from 60.8 million kiloliters (kl) this year.<\/p>\n
Of the total fuel subsidy, more than half of which would be
\nfore kerosene, Rachmat said, with the consumption expected to
\nrise from 11.56 million kl this year to 11.86 million kl in 2005.<\/p>\n
\"The subsidy for kerosene is around Rp 15 trillion, but that's
\nthe government's proposal. The final figure will be taken after
\nthe discussion on the issue is completed,\" Rachmat said.<\/p>\n
He explained that the figure came from the margin between the
\nproduction cost the government has to cover for every liter of
\nkerosene production (set for 2005 at Rp 1,657 per liter), and
\nactual retail price the public is supposed to pay (Rp 700 per
\nliter).<\/p>\n
\"The government intends to maintain the kerosene price in the
\nmarket in 2005 at Rp 700, same as this year's, that's why the
\nsubsidy will rise,\" Rachmat said.<\/p>\n
As for the production cost, it came from 2005 state budget's
\nassumption on oil prices and the foreign exchange rate, added
\nRachmat.<\/p>\n
Fuel subsidies, especially kerosene, have become a sensitive
\nissue in the country as kerosene is widely consumed by many low-
\nincome households and the price consequently directly affects the
\nlives of nearly a hundred million people.<\/p>\n
On the other hand, subsidies are also seen as another burden
\non the already tight state budget, crippled by huge debt payments
\n-- both foreign and domestic.<\/p>\n
The 2005 state budget draft also assumes domestic consumption
\nof premium gasoline at 15.17 million kl, diesel at 26.74 million
\nkl, industrial diesel oil at 1.31 million kl and fuel oil at 6.68
\nmillion kl.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-may-hike-fuel-subsidies-for-2005-1447893297",
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