Govt to allow Pertamina, PLN to raise fuel, power prices
Govt to allow Pertamina, PLN to raise fuel, power prices
Rendi A. Witular, The Jakarta Post, Jakarta
In an attempt to rein in the ballooning fuel subsidy, the
government will allow state oil and gas company PT Pertamina and
state power firm PT PLN to charge market prices for fuel and
power intended for specific uses.
The move is expected to help the government cut projected fuel
consumption from 59.69 million kiloliters (kl) to 55 million kl,
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said
on Monday.
"The government will support any corporate plan from Pertamina
and PLN to raise fuel prices and power rates. However, they will
not be allowed to raise prices and power rates for the five
classifications of users protected by the government," he said
after meeting with President Susilo Bambang Yudhoyono.
Purnomo said these five protected classifications were small
households, small and medium enterprises, public transportation
owners, special transportation operators such as ambulance
services and fire departments, and special purposes, which
include donations and emergency uses.
The government will continue to provide a subsidy for
consumers in these five categories, so the Premium gasoline,
diesel fuel and kerosene they use will cost below global market
prices.
However, Pertamina will be able to raise the prices of its
nonsubsidized Pertamax and Pertamax Plus fuels. Pertamax
currently costs Rp 4,000 per liter and the price could go up to
Rp 5,000 per liter in the foreseeable future.
PLN will increase power rate for large industrial users.
Purnomo said the government also would allow Pertamina to
prohibit cars with an engine capacity of 3,000cc and above from
using subsidized Premium fuel, as well as allowing PLN to review
its power rates for affluent households.
"While the government is still discussing its macro fuel
conservation policy, such as taxes, Pertamina and PLN will be
allowed to decide their own prices for certain users," he said.
Purnomo also said the government might cut the fuel subsidy
for PLN after October should demand for electricity shoot up,
thus forcing the company to purchase more fuel above its
allocated quota for the year.
PLN has a fuel quota of some 9.5 million kl for 2005. As of
the first semester of the year, the company had already used 5.5
million kl of the quota.
The government has allocated Rp 76.5 trillion (US$7.88
billion) in the 2005 budget to subsidize domestic fuel, including
gasoline, kerosene and diesel. The subsidy was determined using
an average global oil price of $45 per barrel.
Despite cutting the subsidy some earlier this year, continuing
high oil prices -- now hovering at about $58 a barrel -- and
increasing domestic demand have pushed the subsidy past the Rp
130 trillion mark.
If the government shoulders this extra cost, it will further
burden the already stretched national budget.