2002 fuel demand may be higher than target
2002 fuel demand may be higher than target
The Jakarta Post, Jakarta
State-owned oil and gas firm Pertamina will publish the results of its domestic fuel consumption survey later this month, with 2002 consumption expected to be higher than the figure stated in the current state budget.
Pertamina downstream deputy director Tuti Anggraeni said on Friday that domestic fuel consumption for this year might exceed 52.7 million kiloliters.
"It may be similar to last year's level of 54.6 million kiloliters, but let's wait for the survey result," she told a press conference.
The 2002 state budget allocates around Rp 30 trillion (US$3.2 billion) in fuel subsidies, with domestic fuel consumption assumed to be 52.7 million kiloliters.
If the actual consumption figure exceeds the amount targeted in the state budget, the government must either increase the subsidy allocation or allow Pertamina to increase the price of domestic fuel products to a level much higher than the government's limit.
Without this measure, Pertamina would suffer financial losses. On the other hand, raising fuel prices higher than the current limit could trigger high inflation and social unrest.
Since March, Pertamina has set domestic fuel prices each month based on developments in the price of oil in the international market. If oil prices increase, Pertamina can raise the fuel price at home. But the increase in fuel prices is capped. For example, the price of premium gasoline has been capped at Rp 1,750 per liter.
Earlier this week, Pertamina announced new fuel prices for the month of May. The price of premium gasoline was increased to Rp 1,750 per liter.
Meanwhile, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that the recent fuel price increase should have a minimal impact on inflation.
He pointed out that the increase would only push the production costs of the industrial sector by an average of 2 percent to 3 percent, as fuel costs only accounted for 20 percent to 30 percent of the operating costs of companies.
He said that the important thing to control prices was to ensure the smooth distribution of goods.
He added, however, that if public transportation fares were increased, it would create strong inflationary pressure.
The government is planning a new price formula for public transportation, which will become effective later this year.
The government is targeting an inflation rate of 9 percent for this year, but rising fuel prices might cause inflation to soar to 12 percent, analysts said.