Indonesians Must Prepare for a Potential Fuel Price Hike, Minister Says

Gayatri Suroyo
Friday, August 12, 2022

Indonesians must prepare for a potential hike in fuel prices as the government looks to control its ballooning energy subsidies amid high global oil prices, a cabinet minister said on Friday.

Southeast Asia's largest economy has tripled this year's energy subsidy budget to 502 trillion rupiah ($34.22 billion) in order to keep some fuel prices and power tariffs unchanged and manage inflation. 

However, this may not be enough, as nearly all of the subsidized fuel quota has already been used, according to the finance ministry. 

Indonesia's Investment Minister Bahlil Lahadalia said if the government has to increase the quota for subsidized gasoline to 29 million kilolitres from 23 million kilolitres, and assuming oil prices stay elevated and the rupiah IDR= weak, the subsidy bill could rise to up to 600 trillion rupiah.

"Please convey to the people that my feeling is we have to get ready in case a fuel price hike happens," Bahlil told a news conference, noting that it was fiscally unwise to spend 25% of government revenues on subsidies.

"The burden on the state is high. Maybe this is momentum for us to work together to keep our fiscal (position) healthy," he added.

Indonesia's Finance Minister Sri Mulyani Indrawati on Thursday said she has asked state energy firm Pertamina to limit sales of subsidized fuels.

Economists have criticized the government's decision to increase subsidies this year, saying this would take money away from projects with bigger economic impacts. 

Critics have also said a widening price disparity between subsidized and unsubsidized fuels has incentivized a shift in domestic consumption patterns and smuggling to neighboring countries, leading to increased sales of subsidized fuels.

A fuel price hike is sensitive in the world's fourth-most populous country and such a decision is usually taken by a head of government. Previous government moves to raise fuel prices have sparked street protests.


($1 = 14,670.0000 rupiah)


 (Reporting by Gayatri Suroyo; Editing by Kanupriya Kapoor)

Categories: Fuel Oil Price

Related Stories

Valeura Energy, PTTEP Partner Up on Gulf of Thailand Blocks

China Starts Production at Major Oil Field in Bohai Sea

CNOOC Finds Oil and Gas in South China Sea

KBR-SOCAR Joint Venture Secures Work for BP in Azerbaijan

EnQuest Acquires Harbour Energy’s Vietnamese Assets

Woodside Finds South Korean Partners to Advance LNG Value Chain

One Shelf Drilling Rig Up for New Job in India, Other for Disposal

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Petrovietnam, Partners Sign PSC for Block Off Vietnam

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Current News

PTTEP Acquires Southeast Asia’s Offshore Block from Chevron’s Hess Unit for $450M

Valeura Energy, PTTEP Partner Up on Gulf of Thailand Blocks

Sapura Scoops Over $118M for Chevron, PTTEP Subsea Ops off Thailand

Pandion Energy Divests Interests in Three Norwegian Assets to Inpex

China Starts Production at Major Oil Field in Bohai Sea

Dutch Contractor Completes Malaysia’s Largest 'Rig-to-Reef' Decom Project

China Rolls Out 17MW Floating Wind Turbine Prototype

SBM Offshore’s Jaguar FPSO Enters Drydock in Singapore (Video)

EnQuest Picks Up Offshore Oil and Gas Block in Brunei

CNOOC Finds Oil and Gas in South China Sea

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com