New power prices not yet decided<\/p>\n
JAKARTA (JP): Minister of Mines and Energy Kuntoro
\nMangkusubroto said yesterday the government was still calculating
\nnew prices for fuel oil and electricity brought about by
\ndevaluation of the rupiah.<\/p>\n
\"I have asked the state electricity company PLN to make a
\nthorough calculation of power cost prices,\" Kuntoro told
\nreporters after a meeting with President Soeharto.<\/p>\n
He added the government would allow PLN to raise electricity
\nprices only after the power company produces convincing cost
\nfigures.<\/p>\n
\"Until now, PLN has not convinced me that its cost
\ncalculations are based on optimum efficiency in its operations,\"
\nKuntoro said.<\/p>\n
Under the terms of the reform package agreed by President
\nSoeharto with the International Monetary Fund on Jan. 15, the
\ngovernment is required to gradually reduce subsidies on
\nelectricity and fuel oil prices beginning in April.<\/p>\n
Kuntoro said he had also asked the state oil company Pertamina
\nto recalculate fuel oil prices.<\/p>\n
The 1998\/1999 state budget which begins in April allocates Rp
\n10 trillion to fuel oil subsidies assuming an exchange rate of Rp
\n5,000 to the American dollar and international crude oil prices
\naveraging US$17 per barrel.<\/p>\n
In a related issue, IMF Asia-Pacific Director Hubert Neiss
\nsaid yesterday the Fund would be flexible in ongoing negotiations
\nwith the Indonesian government on subsidy issues, including in
\nthe fuel sector, an IMF official said yesterday.<\/p>\n
\"In general, the IMF is flexible on subsidies. However, we
\nalso have to take into consideration that the budget deficit can
\nnot be allowed to explode,\" Neiss said after meeting with Vice
\nPresident B.J. Habibie at Merdeka Selatan Palace.<\/p>\n
Kuntoro added that it was not in his purview to revise the oil
\nprice assumed in the 1998\/1999 budget, a task which falls to the
\ncoordinating minister for economic, financial and industrial
\naffairs\/chairman of the National Development Planning Agency.<\/p>\n
\"My responsibility is to cooperate with other oil producers
\ngrouped in OPEC so that the price rises to at least as high as
\nthe target price stipulated in our state budget,\" he added.<\/p>\n
International oil prices fell to US$10.9l per barrel on March
\n16. Benchmark Indonesian crude oil was quoted at US$11.76 per
\nbarrel on March 18.<\/p>\n
Indonesia has proposed that the Organization of Pertoleum
\nExporting Countries (OPEC) cuts output from 27.5 million barrels
\na day, agreed when OPEC countries met in Jakarta last November,
\nto the previous level of 25.03 million barrels, Kuntoro said.<\/p>\n
\"But I am glad to learn that Venezuela, Saudi Arabia and
\nKuwait have agreed to reduce their production,\" he added.<\/p>\n
Indonesia, he said, does not have to cut production because it
\nhas not yet raised output to its new quota of 1.4 million barrels
\nper day agreed last November.<\/p>\n
\"However, if we are asked to cut production we will go along
\nwith whatever is agreed by OPEC,\" Kuntoro said.<\/p>\n
Reuters reported from Singapore that crude oil prices rose in
\nAsia yesterday after the announcement of a producer plan to cut
\nworld crude output by two million barrels per day (bpd).<\/p>\n
At 0730 GMT yesterday, New York Mercantile Exchange (NYMEX)
\nMay crude futures, trading in Asia on the electronic ACCESS
\nsystem, were up US$1.44 per barrel to US$16.05. On Friday, crude
\nprices in New York closed one cent higher at $14.61.<\/p>\n
North Sea Brent blend futures quoted on the Singapore Monetary
\nExchange (SIMEX) were also higher, with prices in May quoted at
\nUS$14.50\/US$14.90 after the price in London settled at US$13.27
\non Friday.<\/p>\n
Saudi Arabia, kingpin of the Organization of Petroleum
\nExporting Countries, Venezuela and non-OPEC producer Mexico
\nannounced a plan to slash 1.6 million to two million bpd off
\nworld output that hit 75 million bpd on Sunday.<\/p>\n
The three producers said they were already committed to cuts
\nof 1.1 million bpd, which come into affect on April 1 and last
\nuntil the end of the year. (prb\/vin)<\/p>",
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