Pertamina raises LPG prices

Pertamina raises LPG prices

JAKARTA (JP): State-owned oil company Pertamina has increased
the prices of liquefied petroleum gas (LPG) and asphalt,
prompting fears that the move will push this year's inflation
rate higher than expected and force people to turn to substitute
fuels, such as kerosene.

Pertamina announced here yesterday that it had increased the
price of LPG -- widely used here for cooking -- by 33.3 percent
to Rp 1,000 (44 U.S. cents) per kg as of Dec. 19.

As of Dec. 4, the company also increased the price of asphalt
by about 15 percent to Rp 420,000 per metric ton.

Pertamina public relations officer Didi Sunarwinadi said that
the company had to raise the prices because of increases in
production costs over the past four years.

The company produces its asphalt from crude oil imported from
the Middle East. The steady depreciation of the rupiah against
the U.S. dollar had, as a consequence, pushed production costs
up, Didi said.

Pertamina said the price of LPG had to be raised due to the
higher freight charges imposed by chartered tankers.

Some observers criticized the move as contrary to the
government's efforts to keep inflation in check.

"The price increase is unexpected. It has the potential to
push up food prices and, as a result, cause higher inflation,
since many households and restaurants use the gas for cooking,"
said Bachrawi Sanusi, an oil and gas analyst.

According Bachrawi, the increase is also likely to encourage
people to return to using kerosene, which costs about Rp 550 per
kg.

"This will result in a surge in the number of kerosene
consumers, which is against the government's policy of
diversifying the sources of energy used in this country," he
said.

Head of the Indonesian Consumers Foundation, Zoemrotin K.
Soesilo, said that Pertamina should have formally announced the
price increase before it came into effect and that the retailers
of the gas should not have raised their prices ahead of the
announcement. "But, in fact, retailers had already increased
their prices as of last week," she said.

Didi said Pertamina did not announce the price rises until
yesterday in order to prevent speculation among dealers and
retailers.

Pertamina's president, Faisal Abda'oe, said separately
yesterday that the price increases would not push up the
inflation rate, because Indonesian LPG consumers are still very
small in number and are located mainly in the major cities. (13)