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Global oil price hikes likely to inflate energy subsidy
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An online motorcycle taxi driver fills his tank at a gas station in Jakarta on Nov. 21. (Antara/Akbar Nugroho Gumay)
F
inance Minister Sri Mulyani has confirmed that 2018 state budget assumptions do not include an increase in subsidized energy prices, either for fuels or electricity.
She, however, said her ministry would closely monitor global oil prices next year to gauge fiscal risks.
“If the global oil price continues to increase, we have to calculate the amount of subsidy and state revenue,” she said as reported by kontan.co.id. on Wednesday.
Read also: Government maintains energy prices for Q1 2018
The contract price of West Texas Intermediate (WTI) was US$59.97 per barrel on Tuesday, while the price of Brent Crude Oil was at $67.05 per barrel.
Goldman Sachs estimates the price of Brent Crude in the first quarter of 2018 will be about $62 per barrel, WTI $57.5 per barrel and the Indonesian Crude Price (ICP) $59 per barrel.
Meanwhile, the assumption of the IPC in the 2018 state budget is $48 per barrel. The energy subsidy has been set at Rp 94.42 trillion for next year.
The result of a stress test shows if the ICP increases $20 per barrel, the subsidy burden will increase by Rp 11.68 trillion. (bbn)
