Miners, exporters to loose diesel subsidies
Rendi A. Witular, The Jakarta Post/Jakarta
The government plans to make miners and exporting companies pay the market price for diesel in a move to save money on increasingly costly subsidies for the fuel.
"Companies engaged in mining and export-oriented businesses will have to pay for diesel fuel based on the market price," said Coordinating Minister for the Economy Aburizal Bakrie after meeting President Susilo Bambang Yudhoyono on Friday.
"Miners and exporters can afford to pay for diesel at the market rate. The private sector should get used to the new conditions; that the government will no longer provide them with energy subsidies," he said.
Aburizal said the government was likely to issue the regulation setting a new price for diesel in line with international prices next month.
Industrial users currently pay state oil and gas company Pertamina only 75 percent of the market rate. The government had already increased the price of diesel for industry by 33 percent from Rp 1,650 (17 U.S. cents) a liter to Rp 2,200 in May.
The government has already allocated Rp 76.5 trillion in its budget this year to subsidize domestic fuels, including gasoline, kerosene and diesel based on a global price average of $US45 a barrel. Despite cutting some of the subsidies earlier this year, continuing high oil prices -- now at around US$61 a barrel -- and increasing domestic demand is pushing the subsidy costs to more than Rp 110 trillion.
If the government shouldering the extra costs it will further burden the already stretched national budget.
"We already have had to spend extra money on fuel subsidies in the first six months of this year. However, the amount is still at a controllable level," Aburizal said.
Speaking on the fuel shortage, the minister said PT Pertamina officials had reported to the President that oil supplies were back to normal in most parts of the country apart from several remote cities.
Pertamina president director Widya Purnama said on Wednesday that fuel stocks were expected reach a national average of 21.6 days in reserve supply, slightly lower than the safe level of 22 days.
Gas stations across the country have been short of fuel for about two weeks after Pertamina cut back fuel supplies to the regions so as not to overshoot the government-set quota of 59.6 million kiloliters (kl) supply for this year. The figure is below last year's realized quota of 62.3 million kl.
National demand has been about 10 percent higher than budgeted supplies for the first half of the year.