Govt Almost Certain to Raise Fuel Price in May

The government is almost certain to increase subsidized premium gasoline and diesel oil prices next month from Rp4,500 per liter to Rp6,500 or Rp7,000 for private cars.

According to Energy and Mineral Resources Minister Jero Wacik, the government has almost reached a decision to impose a dual pricing system on subsidized gasoline and diesel oil where two wheel vehicles and public transportation means will still enjoy the current full subsidy price of Rp4,500 per liter.

However, price for private cars will be raised from Rp4,500 to (reduced subsidy) Rp6,500 or Rp7,000 per liter.  “The economic price of premium gasoline per liter is about Rp9,500 per liter. If it is sold at Rp4,500 per liter, the subsidy will reach Rp5,000 per liter. Financially capable consumers will not enjoy the full subsidy. However, if the price is raised to Rp6,000 they will still enjoy a subsidy of about Rp3,000 per liter,” he said.

“The people know that the government will reduce fuel subsidy. The reason is for fairness. So, the government will cut subsidy and regulate it to provide fairness for consumers (based on their financial capability,” Jero Wacik said.

In line with its plan to increase premium gasoline and diesel oil prices next month, the government is now racing against time to make technical preparations so that the plan could be implemented smoothly without creating problems.

Deputy Minister for Energy and Mineral Resources Susilo Siswoutomo said on Friday that his side in cooperation with the relevant parties continued to make technical preparations for the implementation of subsidized fuel price hikes.

“We have set a deadline to finish the technical preparations on April 26-27, 2013,” the deputy minister said.  After they have been completed, the technical preparations would be submitted to a cabinet meeting before a decision was made with regard to price increase rate and its effective date.

Following its announcement, the price increase will directly become effective. “For example, the announcement is made tonight, it will directly become effective as of 00.00 hours Western Indonesia Standard Time (WIB),” he said.

He said that technical preparations included physical preparations such as banners, sign boards, regulations and security measures.

However, the government, while preparing technical matters, is still carefully considering various aspects and impacts of the policy it will take with regard to fuel oil price hikes.

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