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Govt plans gradual hikes for Pertalite, 3kg LPG
The government is bracing to gradually raise the price of all subsidized fuels, as the state budget may be unable to absorb all the impact from the global surge commodity prices, but has promised it will be careful in its timing and public communication.
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Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan speaks on Nov. 18, 2021 at the Army Staff and Command School in Bandung, West Java. (Office of the Coordinating Ministry for Maritime Affairs and Investment/Public relations team)
T
he government plans to raise the prices of subsidized Pertalite gasoline and 3-kilogram cylinders of liquefied petroleum gas (LPG) in the coming months to protect the state budget from surging commodity prices.
Coordinating Maritime Affairs and Investment Minister Luhut Binsar Pandjaitan said on April 1 that the government had no other choice than to raise the prices of the subsidized fuels to narrow the gap between global and domestic prices.
Pertalite and 3 kg LPG cylinders are the two most popular fuels in their classes and comprise the majority of domestic gasoline and LPG consumption, according to data from state-owned oil and gas giant Pertamina.
“The hike is already extraordinary. If we keep maintaining the [current] prices, Pertamina will break. So, we are forced to let go,” Luhut told reporters during a visit to the Greater Jakarta light rail transit (LRT) project in Bekasi, West Java.
“All [fuel prices] will go up. There are none that will not go up. So, we will do it gradually,” he added.
Read also: High oil prices put new strains on state budge
The planned hikes are another government measure to minimize state spending on energy subsidies as world oil prices surge, due to rising demand around the world amid global economic recovery and Russia's war in Ukraine. At the same time, Indonesia is committed to reinstating a budget deficit cap of 3 percent of gross domestic product (GDP) by 2023.
