Indonesia asks Pertamina to limit subsidised fuel sales

Indonesia asks Pertamina to limit subsidised fuel sales
FILE PHOTO: An employee at a Total fuel station fills up a motorcycle in south Jakarta February 12, 2015. Picture taken February 12, 2015. REUTERS/Darren Whiteside/File Photo

JAKARTA : Indonesia’s government has asked state energy firm Pertamina to limit its sales of subsidised fuels so as not to increase pressure on energy subsidies, Finance Minister Sri Mulyani Indrawati said on Thursday.

Indonesia has jacked up its energy subsidies this year to 502 trillion rupiah ($34 billion), aiming to keep prices of some fuels and power tariffs unchanged amid rising global energy prices and the rupiah’s depreciation.

This has helped keep inflation in Southeast Asia’s largest economy relatively low, at 4.94 per cent last month. The central bank has also said this provided it with room to delay rate hikes.

The subsidy budget assumes sales of subsidised diesel for the entire year will reach 15.1 kilolitres, and sales of subsidised gasoline at 23.1 kilolitres, but current sales volume has already reached around those levels, said Isa Rachmatarwata, budgeting director general at the finance ministry.

“That’s why I have asked Pertamina to control (sales volume) so that the state budget will not face additional pressure,” Sri Mulyani said in a news conference.

Pertamina plans to limit subsidised fuel sales by making consumers register their vehicles digitally so the company can identify whether subsidies have reached intended recipients, its trading unit Pertamina Patra Niaga’s Corporate Secretary Irto Ginting told Reuters.

However, Pertamina is still waiting for government rules on fuel sales and distribution, Ginting added.

Economists have criticised the government’s decision to upsize subsidies this year, saying this would take money away from projects with bigger economic impacts.

Said Abdullah, head of parliament’s budgetary committee, said the government and parliament are set to discuss the effectiveness of subsidies.

“If we continue to rely on the state budget without improving the mechanism of subsidies, many priority agendas for national development will not be achieved,” he said.

($1 = 14,765.0000 rupiah)

 

Source: Reuters