State budget to be unaffected even oil prices hit $80

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the state budget would remain safe even if oil prices reached up to US$80 per barrel, with an increase in the current fuel quota of 10 percent at the most.

Speaking after a Cabinet meeting on Tuesday, he said the government would have to spend about Rp 110 trillion (US$11.3 billion) to subsidize fuel this year should oil prices stand at $50 a barrel with a 10 percent increase in the current fuel quota of 59.6 million kiloliters.

The government will have to allocate Rp 138 trillion and Rp 150 trillion for the fuel subsidy if oil prices soar to $60 and $80 per barrel, respectively.

At present, the revised state budget allocates Rp 76.5 trillion for the fuel subsidy.

Purnomo also said that President Susilo Bambang Yudhoyono had ordered state oil and gas company PT Pertamina to provide sufficient fuel, especially premium gasoline, in a bid to ease people's concerns over shortages in several areas.

"The President wants Pertamina to provide enough stock for premium gasoline and drop any plan that forces the public to use the more expensive fuel, Pertamax gasoline, which is not subsidized," he said.

Coordinating Minister for the Economy Aburizal Bakrie told The Jakarta Post after the meeting that the government would consult the House of Representatives in August to revise the fuel subsidy allocation to comply with the rising oil prices.

"We are likely to revise again the subsidy allocation. If the House rejects our proposal, we have to explore other ways to help offset the rising oil prices and demand as well as the rising subsidy," he said.

A report from the Ministry of Foreign Affairs revealed that Indonesia is the country most affected by the skyrocketing oil prices. -- JP