Indications of Rising Fuel Prices Strengthen
The plan to increase the price of fuel, LPG and electricity rates was conveyed by the Minister of Energy and Mineral Resources (ESDM)
Arifin Tasrif in a working meeting at Commission VII DPR, in Jakarta. According to Arifin, the assumption of Indonesia's crude oil price (ICP) in the 2022 state budget is US$63 per barrel, far below the real price which in March 2022 was US$98.4 per barrel. Meanwhile, the contract price of gas (CP Aramco) for LPG is 839.6 US dollars per tonne, an increase from the beginning of the year which was around 569 US dollars per ton. “In the medium term, our strategy is to adjust the price of pertalite, diesel, and accelerate the replacement of fuel. For example, gas fuel or bioethanol. The adjustment of subsidized fuel prices will follow the economic price," said Arifin. For gas fuel, said Arifin, one of the government's medium-term strategies is to increase the retail selling price. He believes that this method can reduce pressure on the state budget. This strategy will also be followed by a direct LPG subsidy scheme to users who are entitled to be subsidized. The government also plans to increase electricity tariffs as a short-term strategy to respond to the impact of rising world oil prices. He confirmed that the plan will be carried out this year. Potential savings in compensation if electricity tariffs are increased by Rp 7 trillion to Rp 16 trillion. Responding to the plan, Deputy Chairperson of Commission VII DPR Eddy Soeparno said that the government needs to detail the plan to increase the price of pertalite, diesel, LPG, and electricity tariffs along with the timing of their realization. Such details are important because they relate to the impact that will be felt by the community and the industrial sector.
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