Indonesia Expects Fuel Subsidy Costs to Decline 44% Next Year
|
|
|
|
Friday, 22 August 2008 |
|
Indonesia, Southeast Asia's biggest oil consumer, expects its cost of
capping fuel prices to decline 44 percent in 2009 as a stronger rupiah
makes imports cheaper and more people switch to gas for cooking.
Fuel subsidies may fall to 101.4 trillion rupiah ($11 billion) next year, from an estimated 180.3 trillion rupiah in 2008, President Susilo Bambang Yudhoyono said in an annual speech in parliament last week. The government assumed Indonesian oil would average $100 a barrel for next year's budget, which is forecast to post a deficit of 99.6 trillion rupiah.
The decline in fuel subsidies will help the government cap its budget deficit at 1.9 percent of gross domestic product next year, unchanged from this year, Yudhoyono said. The government, seeking to avoid another fuel-price increase before 2009 elections, is encouraging the nation's 35 million poor to reduce kerosene consumption.
To control subsidy costs, ``the government will expedite the program of converting kerosene to liquefied petroleum gas,'' Yudhoyono said in parliament in Jakarta today. The government will keep amending its subsidy policy ``based on current developments of global oil price.''
State oil company PT Pertamina had distributed free LPG stoves to 9.34 million low-income families and small businesses by June 30 as part of the drive to replace the more expensive kerosene as a fuel for cooking. That's 22 percent of the overall target aimed to be achieved in 2011.
The program may reduce consumption of kerosene by a third, the government estimates. A decline in global energy costs may help the Southeast Asian nation cap its subsidy burden. Crude oil prices have declined 23 percent from a record $147.27 reached on July 11.
The government also expects the rupiah to appreciate 1.6 percent to 9,100 against the dollar and reduce import costs.
PetrolWorld 180808
|
