Pertamina delays new fuel price statement

The Jakarta Post, Jakarta

State-owned oil and gas firm Pertamina delayed on Tuesday announcing the new fuel prices for the month of May as labor groups are preparing for a massive rally.

Company spokesman Adiatma Sardjito said that until late in the day the government had not yet given the green light for Pertamina to publish the new price list. He could not say why.

Pertamina was supposed to make the announcement on Tuesday.

Since Jan. 16, the government has pegged most fuel products except kerosene for households and small industry, to prices in neighboring Singapore. Starting from March the prices are set monthly based on the price of the Mid Oil Platts Singapore (MOPS), although the government has also set a floor price and ceiling price to anticipate sharp fluctuation in the international price. The floor price and ceiling price for premium gasoline, for instance, is set at Rp 1,450 and Rp 1,750.

As international oil prices have been hovering at an average of US$26 per barrel during the past couple of weeks, experts are predicting that fuel prices for March would increase.

Indeed, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Monday that the price of premium gasoline for May could increase to Rp 1,750 per liter, which is the ceiling limit, from Rp 1,600.

Raising fuel prices has been a politically sensitive issue in the country where tens of millions of poor people have suffered from three years of economic hardship.

With dozens of labor groups planning to stage a rally on Wednesday to commemorate labor day, the government seems to have no choice but to delay the announcement of the new fuel prices.

Adiatma said that until the new price list is published, the current list is still valid.

Higher fuel prices will also trigger inflation. With monthly inflation already in the double-digit level during the past three months, Coordinating Minister for the Economy, Dorodjatun Kuntjoro-Jakti admitted last week that the inflation for this full year could reach 12 percent, compared to the government's original target of 9 percent.

The government has said that pegging fuel products at home to the international price is crucial to help reduce the burden of the state budget and curb fuel smuggling out of the country.

Meanwhile, a source said that the government was also considering to revise the current mechanism in setting domestic fuel prices.