Price of LPG, high quality gasoline hiked

The Jakarta Post, Jakarta

State oil and gas company PT Pertamina announced on Saturday it will raise the retail prices of its high quality gasoline brands Pertamax and Pertamax Plus by 63.3 percent and 52.7 percent, respectively.

It also increased the price of liquefied petroleum gas (LPG) by 41.6 percent.

The new prices will be effective on Sunday. Motorists will now have to pay Rp 4,000 per liter for Pertamax and Rp 4,200 per liter for Pertamax Plus.

Meanwhile, the new LPG price was set at Rp 4,250 per kilogram, compared to the previous price of Rp 3,000 per kg. LPG price in Batam was increased to Rp 4,800 per kg from Rp 3,500 per kg previously.

Pertamina's deputy director for marketing A. Faisal said that the price increase was necessary to avoid the company from suffering financial losses amid the current surge in oil prices.

"The soaring world oil prices is the main reason for the necessity to adjust the prices of LPG, Pertamax, and Pertamax Plus," he was quoted by Antara as saying.

Pertamina is allowed to make adjustments in the prices of the above fuel products without the government's approval because the commodities are no longer regulated.

On regulated fuel products such as premium gasoline and automotive diesel, the government has said that it would cut down the expensive subsidy on these products, and consequently raising their prices. The price increase may take place sometime in the first quarter of next year, at a time when rice harvest is also taking place, to help minimize the resulting inflationary impact.

Although raising fuel prices maybe a politically sensitive policy, the move is unavoidable to help ensure an effective use of the cash-strapped state budget, which this year alone set aside up to Rp 59.2 trillion for fuel subsidy, a relatively huge sum if compared to only Rp 70 trillion allocated for development spending.