Oil-based fuels to rise to market levels by 2008<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
Following a process of gradually reducing costly fuel subsidies
\nover the coming years, the government hopes to eventually arrive
\nat a stage where the prices of gasoline and other oil-based fuels
\nwill be determined by those prevailing on the international
\nmarket by 2008 at the latest.<\/p>\n
To achieve this goal, the government is preparing a blueprint
\ncontaining prices of fuel suitable for the public, Minister of
\nEnergy and Mineral Resources Purnomo Yusgiantoro said on Tuesday.<\/p>\n
"We should have started applying economically feasible fuel
\nprices in 2004. But due to various problems, this goal
\ncould not be achieved by the previous administration," he said at
\na press conference after meeting Vice President Jusuf Kalla. He
\ndid not elaborate on the "problems" he was referring to.<\/p>\n
Purnomo said the blueprint would only regulate prices for
\npremium gasoline, diesel and kerosene, all of which are still
\nheavily subsidized by the government.<\/p>\n
The blueprint would be discussed further during an upcoming
\nCabinet meeting.<\/p>\n
Indonesia, Southeast Asia's largest economy, is expected to
\nspend over US$10 billion this year to keep the prices on the
\ndomestic market of these three types of fuels well below
\ninternational market prices.<\/p>\n
Working Committee A of the House of Representatives' Budget
\nCommission has drafted two scenarios for the second revision of
\nthe 2005 state budget, involving fuel subsidy spending of Rp
\n113.7 trillion and Rp 89.5 trillion respectively.<\/p>\n
Committee member Catur Sapto Aji said that the first proposal
\nenvisaged a deficit of Rp 23 trillion. "If we choose the second
\nscenario, the government will have leeway to increase fuel
\nprices," he said.<\/p>\n
If the Budget Commission was unable to choose between the two,
\na vote would be held by the full House at a plenary session next
\nweek.<\/p>\n
However, with global oil at record highs of over $65 per
\nbarrel, the government simply can no longer afford the cost of
\nthe fuel subsidies, and, unless action is taken to reduce them,
\nthey will severely affect not only the fiscal balance, but also
\nmonetary stability.<\/p>\n
The huge disparity between domestic gasoline, diesel and
\nkerosene prices and overseas prices has long been blamed for
\nrampant fuel smuggling and adulteration, which inflict losses of
\nmore than Rp 8.8 trillion (US$874 million) on the taxpayer
\nannually.<\/p>\n
"The smuggling, adulteration and stealing of subsidized fuel
\ncannot be prevented entirely, unless we scrap the subsidies and
\ngo by international market prices. We will make sure that this
\ndoes not cause social unrest," said Purnomo.<\/p>\n
For the next three years, the Downstream Oil and Gas Executive
\nAgency (BPH Migas) will supervise the distribution of subsidized
\nfuel in a bid to prevent corruption and smuggling, with the money
\nto pay for such supervision being allocated by the agency.<\/p>\n
The government has announced that it will increase fuel prices
\nin early October, prior to Idul Fitri, to keep the state budget
\nout tract.<\/p>\n
However, the exact date of the fuel price increase and how
\nmuch prices will go up have yet to be announced.<\/p>",
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