New power prices not yet decided
New power prices not yet decided
JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto said yesterday the government was still calculating new prices for fuel oil and electricity brought about by devaluation of the rupiah.
"I have asked the state electricity company PLN to make a thorough calculation of power cost prices," Kuntoro told reporters after a meeting with President Soeharto.
He added the government would allow PLN to raise electricity prices only after the power company produces convincing cost figures.
"Until now, PLN has not convinced me that its cost calculations are based on optimum efficiency in its operations," Kuntoro said.
Under the terms of the reform package agreed by President Soeharto with the International Monetary Fund on Jan. 15, the government is required to gradually reduce subsidies on electricity and fuel oil prices beginning in April.
Kuntoro said he had also asked the state oil company Pertamina to recalculate fuel oil prices.
The 1998/1999 state budget which begins in April allocates Rp 10 trillion to fuel oil subsidies assuming an exchange rate of Rp 5,000 to the American dollar and international crude oil prices averaging US$17 per barrel.
In a related issue, IMF Asia-Pacific Director Hubert Neiss said yesterday the Fund would be flexible in ongoing negotiations with the Indonesian government on subsidy issues, including in the fuel sector, an IMF official said yesterday.
"In general, the IMF is flexible on subsidies. However, we also have to take into consideration that the budget deficit can not be allowed to explode," Neiss said after meeting with Vice President B.J. Habibie at Merdeka Selatan Palace.
Kuntoro added that it was not in his purview to revise the oil price assumed in the 1998/1999 budget, a task which falls to the coordinating minister for economic, financial and industrial affairs/chairman of the National Development Planning Agency.
"My responsibility is to cooperate with other oil producers grouped in OPEC so that the price rises to at least as high as the target price stipulated in our state budget," he added.
International oil prices fell to US$10.9l per barrel on March 16. Benchmark Indonesian crude oil was quoted at US$11.76 per barrel on March 18.
Indonesia has proposed that the Organization of Pertoleum Exporting Countries (OPEC) cuts output from 27.5 million barrels a day, agreed when OPEC countries met in Jakarta last November, to the previous level of 25.03 million barrels, Kuntoro said.
"But I am glad to learn that Venezuela, Saudi Arabia and Kuwait have agreed to reduce their production," he added.
Indonesia, he said, does not have to cut production because it has not yet raised output to its new quota of 1.4 million barrels per day agreed last November.
"However, if we are asked to cut production we will go along with whatever is agreed by OPEC," Kuntoro said.
Reuters reported from Singapore that crude oil prices rose in Asia yesterday after the announcement of a producer plan to cut world crude output by two million barrels per day (bpd).
At 0730 GMT yesterday, New York Mercantile Exchange (NYMEX) May crude futures, trading in Asia on the electronic ACCESS system, were up US$1.44 per barrel to US$16.05. On Friday, crude prices in New York closed one cent higher at $14.61.
North Sea Brent blend futures quoted on the Singapore Monetary Exchange (SIMEX) were also higher, with prices in May quoted at US$14.50/US$14.90 after the price in London settled at US$13.27 on Friday.
Saudi Arabia, kingpin of the Organization of Petroleum Exporting Countries, Venezuela and non-OPEC producer Mexico announced a plan to slash 1.6 million to two million bpd off world output that hit 75 million bpd on Sunday.
The three producers said they were already committed to cuts of 1.1 million bpd, which come into affect on April 1 and last until the end of the year. (prb/vin)