Higher fuel prices set for export firms
Higher fuel prices set for export firms
JAKARTA (JP): The government will require export oriented
companies, large industrial users, shipping and fishing companies
to pay fuel at international prices, which are more than three
times as high as domestic prices at present.
This pricing scheme will likely be introduced in April
parallel with the government's plan to raise domestic fuel prices
by an average 20 percent for general consumers, Minister of
Energy and Mineral Resources Purnomo Yusgiantoro said on
Wednesday.
However, Purnomo told the House of Representatives, the
government was still undecided over the April target, and might
delay issuing the presidential decree on the fuel price hike.
"Based on the results of a cabinet meeting on February 8,
plans to increase fuel prices must consider the social,
economical and political dynamics of this nation," Purnomo added.
The 2001 state budget, which allocates Rp 41.3 trillion for
fuel subsidies, has assumed that fuel prices will increase by an
average 20 percent in April.
Purnomo said that the decree might introduce three kinds of
prices.
"The first tier-price scheme will set fuel price increases of
an average of 20 percent (general users), the second scheme will
raise fuel prices to the international levels for certain
industrial consumers and the third will set prices at Pertamina's
cost price," he said.
Export firms, large industrial users, shipping and fishing
companies (bunker services) must purchase fuel at international
market prices, he said.
But Purnomo did not specify who would be the target users of
the fuel which will be sold at Pertamina's cost price.
State oil and gas company Pertamina, which produces fuel for
domestic use, has still to import to meet national consumption.
Most industrial users consume diesel oil to generate
electricity, or use it as fuel for ships.
In the U.S., for example, the retail price of diesel oil is
about $1.5 cents per gallon, or around Rp 4,000 a liter, as
compared to the local subsidized price of Rp 600 per liter. In
Singapore diesel oil is sold at the equivalent of Rp 2,000 per
liter.
Currently some foreign mining companies in Indonesia already
purchase fuel at international prices.
Purnomo said that the government had met several industrial
associations to consult them about the fuel price increase.
The associations of the fishing and textile industries had
earlier criticized the policy as a threat to their businesses.
Pertamina last year issued directives to various industries
instructing them to buy fuel at international prices.
But strong protests from the industries prompted the
government to backtrack and delay the plan.
Last month, Pertamina again urged the government to remove the
fuel subsidy on major industrial users.
According to the company, the government could save up to Rp 9
trillion (about US$947 million) in fuel subsidy spending each
year, if it forced these industries to buy fuel at international
prices.
However, the government may delay the plan a second time from
its original schedule in April as such an unpopular measure might
add political pressure to embattled President Abdurrahman Wahid.
A fuel price hike in early 1998 had been one of the triggers
of the May riots which led to the resignation of then president
Soeharto.
Although Finance Minister Prijadi Praptosuhardjo has insisted
that fuel prices must go up, the schedule over the hike is
undecided.
The government postponed last year's fuel price hike from
April to October, due to mounting public protests.
Purnomo said that all technical details of the fuel price hike
had been completed, and timing was now the only consideration.
He said earlier that a more definitive timing awaited a
meeting with the Coordinating Minister of Social and Security
Affairs.(bkm)