National

Government Prepares Two Fuel Price Increase Schemes
Wednesday, 07 September, 2005 | 19:44 WIB

TEMPO Interactive, Jakarta:The Indonesian government is proposing two schemes as regards the fuel price increases.

According to Minister of Energy and Mineral Resources Purnomo Yusgiantoro, these schemes can be changed based on the social and political situation in Indonesia.

“Fuel subsidies can be reduced in two ways, in stages or direct,” said Yusgiantoro during a hearing session with House of Representatives (DPR) Commission VII members on Monday (05/09).

The increase in stages, Yusgiantoro said, had two patterns, a time-to-time increase towards the market price and an automatic price adjustment towards the market price.

“So, the price will automatically increase in a certain time,” he stated.

According to Yusgiantoro, the second pattern was once imposed in 2002, when fuel prices increased every month following the rise in international oil prices.

The second scheme, Yusgiantoro said, was an automatic price adjustment towards the market price for particular fuels.

Currently, the price of some types of fuel, such as premium and diesel, is approaching the economic price.

Yusgiantoro added that the government has formulated six stages in determining the price subsidies.

The first stage is that all kinds of fuel still receive subsidies.

The second stage is that the Avtur and Avgas fuels are released based on the market price.

The third stage is that the price of fuel oil, diesel oil, kerosene and industrial diesel fuel is adjusted to the market price.

“This year, we have already entered the third stage,” stated Yusgiantoro.

The 2006 subsidies, when the fourth stage starts, will still be provided but such subsidies will already have been reduced.

Subsidies will likely be provided for kerosene for household purpose, as well as premium petrol for personal and public transportation.

The government will still provide subsidies for diesel for personal and public transportation as well as for fishing boats.

According to Yusgiantoro, in the fifth stage, in 2007, the government will only subsidize kerosene.

“We are yet to identify exactly when stage six will start. In this stage, there will be no more subsidies. We hope by 2017 and this stage might continue for two or three years, depending on social and political development progress,” he stated. (Muhamad Fasabeni-Tempo News Room)