Increase in fuel subsidies led to price adjustment: minister

Hence, there will be an increase from approximately Rp 137 trillion to Rp 151 trillion according to the ICP.

Jakarta (ANTARA) – The government has resorted to raising fuel prices because its spending to subsidize prices has continued to rise despite the recent decline in global oil prices, Finance Minister Sri Lanka said on Saturday. Mulyani Indrawati.

At a press conference at Merdeka Palace here, she said the government has made several calculations regarding the changes in Indonesian Crude Oil (ICP) prices and their impact on the subsidies offered in the 2022 state budget.

Assuming a KPI of less than USD 90 per barrel or an average price of USD 97 to USD 99 per barrel throughout the year, energy subsidy expenditure would further increase from the government allocated budget of Rp 502.4 trillion at Rp 653 trillion.

“Yet we continue to calculate it,” the minister said.

Even with a PCI of $85 a barrel, the subsidy would rise from Rp502 trillion to Rp640 trillion, she added.

“Therefore, there will be an increase from about Rp137 trillion to Rp151 trillion according to the ICP,” Indrawati noted.

The government will continue to monitor global oil prices as currently geopolitical conditions and global economic projections are still very dynamic, she added.

Meanwhile, President Joko Widodo has said the government will divert fuel subsidies to provide more targeted social assistance. Therefore, there will be an adjustment in fuel prices.

The central government has allocated 12.4 trillion rupees to provide direct cash assistance to 20.65 million families as well as 9.6 trillion rupees for wage subsidy assistance to 16 million workers whose maximum salary is 3.5 million rupees per month.

Local governments have also been asked to allocate 2% of the general transfer fund worth Rs 2.17 trillion to provide transportation subsidies and additional social protection to people in their respective areas.

At the same press conference, Minister of Energy and Mineral Resources Arifin Tasrif informed that the price of subsidized Pertalite fuel has been revised to Rp 10,000 per liter from Rp 7,650 per liter from 14 30 a.m. Western Indonesia Standard Time (WIB) Saturday.

The government has also revised the price of subsidized diesel from Rp 5,150 per liter to Rp 6,800 per litre. Meanwhile, the price of unsubsidized Pertamax fuel has risen from Rp 12,500 per liter to Rp 14,500 per litre.

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Eleanor C. William