Pertamina Expects Indonesia Fuel Subsidies to Be Lifted by 2014
PT Pertamina expects the Indonesian government to phase out fuel subsidies by 2014 to help ease the burden on the state budget, said Karen Agustiawan, president director at the country’s state oil and gas company.
“We have hopes, actually, speaking with the director general of oil and gas, that by 2014 we will be phasing out subsidies, meaning subsidies will be given directly to the needs,” Agustiawan said in a Bloomberg Television interview at the World Economic Forum on East Asia in Jakarta yesterday.
Indonesia, Southeast Asia’s biggest economy, delayed a plan to limit fuel subsidies due to the threat of faster inflation amid gains in oil prices, Teuku Rifky Harsya, chairman of the parliamentary commission for energy affairs, said March 21.
The government had planned to ban owners of private cars from buying subsidized fuel on Java island from April to reduce subsidy costs, Evita Legowo, director general of oil and gas at the Energy Ministry, said at the time.
The government is studying options for fuel subsidy cut plan and its effect to inflation, Agustiawan said.
“Right now what we are trying to do is to phase out public transportation first into using gas and in the household sector from kerosene to LPG and that has reduced significantly the amount of government subsidy to the people,” Agustiawan said.
Indonesia’s 2011 budget deficit will probably exceed the government’s assumption of 1.8 percent of gross domestic product due to higher-than-expected crude oil prices, the Ministry of Finance said in its 2012 budget report in May.
The ministry had based its 2011 estimate on a crude-price assumption of about $80 a barrel, and oil will probably trade at an average $90 to $100 a barrel this year, according to the report. It didn’t say by how much the deficit would likely widen.
Oil has risen about 12 percent in the past six months on concern of supply disruption due to political tension in the Middle East and North Africa. July-delivery crude fell 2.6 percent to $99.3 a barrel in New York on June 10.
To contact the reporters on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net; Haslinda Amin in Singapore at hamin1@bloomberg.net
To contact the editor responsible for this story: Greg Ahlstrand at gahlstrand@bloomberg.net.
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