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Government cuts price of subsidized gasoline; consumption may rise 5%
As expected, the government cut the price of subsidized Premium gasoline on Dec
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As expected, the government cut the price of subsidized Premium gasoline on Dec. 1 to reflect the declining global crude oil price, although the regulator expects no significant increase in consumption of the fuel.
Starting Monday, Premium gasoline is sold at a new price of Rp 5,500 (45 US cents) per litter, following last month's announcement by the government to slash the price by Rp 500 per litter.
Downstream oil and gas regulator BPH Migas said Sunday the price reduction would not lead to a significant increase in fuel consumption.
"As the price disparity between subsidized Premium gasoline and high octane Pertamax is getting smaller, we predict consumption will only rise by 5 percent and this will happen in the short term only," BPH Migas chairman Tubagus Haryono said.
In Greater Jakarta, the price of high octane Pertamax is Rp 6,800 per liter, or Rp 1,300 higher than subsidized Premium gasoline. Tubagus said he believed the price disparity was not significant enough to make vehicle users switch their fuel.
The consumption of subsidized Premium gasoline reached between 58,000 and 60,000 kiloliters a day, state oil and gas company PT Pertamina's trade and marketing director Ahmad Faisal said on Sept. 19.
Pertamina, the sole distributor of subsidized fuels, said it would closely monitor its subsidized Premium gasoline stock to anticipate a possible increase following the price cut.
"We have to stock for more than 20 days and this is enough," said Pertamina's spokesperson Anang Rizkani Noor.
On the same day, PT Pertamina also cut the prices of non-subsidized Premium gasoline sold to industry.
In Greater Jakarta, the price of Premium gasoline for industry was reduced to Rp 6,500 per litter or 1.52 percent lower than the previous price of Rp 6,600 per litter.
"The reduction was made due to the fluctuation of Mid Oil Platts Singapore (MOPS) fuel prices and the weakening rupiah against the U.S. dollar," the state oil and gas company said in a statement.
Pertamina also cut the price of diesel sold to industry, making it closer to subsidized diesel. In Greater Jakarta, its prices dropped to Rp 6,627 from Rp 6,951.
The price of subsidized diesel stands at Rp 5,500 per litter.
"The government is monitoring diesel price trends closely," said Evita H. Legowo, director general for oil and gas and the energy and mineral resources ministry
The government only subsidizes four types of fuel sold to households and motorists -- Premium gasoline, diesel, kerosene and 3-kilogram liquefied petroleum gas (LPG).
Evita said the government would continue to monitor the global price of crude oil, which could also lead to a cut in the prices of other subsidized fuels such as diesel and kerosene.
