No Fuel Price Hike Despite Iraqi War Plan

TEMPO Interactive, Jakarta:The Indonesian government will not increase fuel prices despite the possible Iraqi war. Fuel price will remain as they are now. But, the risk is that we will have to increase fuel subsidies, said Minister of Energy and Mineral Resources Purnomo Yusgiantoro before attending a limited cabinet meeting on the oil and gas sector at the Ministry of Finance in Jakarta on Friday (7/2). Yusgiantoro explained that despite oil prices continuing to increase, the government would not increase fuel prices. If the price increases were quite high, the government will add to fuel subsidies from windfall profit funds. Starting from now, the government plans to increase subsidies by Rp1 trillion each month while it is assumed that windfall profits will total Rp2.7 trillion each month. According to Yusgiantoro, the windfall profit assumption is carried out each month as some of the funds, after being deducted with local income, will be included in additional budget items. We will include this in certain items in the State Budget. We will then use this to cover the additional subsidies, he said. However, the government hoped that international fuel prices would be stable again this spring, around April. Usually, in spring, the international need for oil decreases as the public no longer needs heaters or coolers at that time. This will lead to fuel price decreases as the supply of oil is greater than the demand. Yusgiantoro also said that despite the possible war, the production of Iraqi oil still continues and reaches between 1.5 million to 2 million barrels per day. Also, several days ago, we heard that Venezuela has restarted oil production and is producing up to 1.2 million barrels per day. So, we have an additional supply from there, said Yusgiantoro. However, Yusgiantoro said he considered that the current price of international oil was still high, at US$30.5 per barrel, although it did drop to US$29.5. But this morning, the price went back up to US$30.5 per barrel, he said. The government also wants oil prices to be normal again in the next three months, or at least remain above to the US$22 per barrel set in the State Budget. According to Yusgiantoro, OPEC is hoping for prices to range between US$22 and 28 per barrel, the upper and lower limits of Indonesian fuel prices. So, if international oil prices goes down, fuel prices will likely decrease. If oil prices stay below US$25, fuel price will also decrease, said Yusgiantoro. (Dara Meutia UningTempo News Room)