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Jakarta Post

Govt braces for higher fuel subsidy

  • Alfian


JAKARTA   /   Thu, February 26 2009   /  08:59 am

The government will be forced to dig deeper into its pockets for fuel subsidy allocations after a House of Representatives’ commission agreed Wednesday to give state oil and gas firm PT Pertamina greater cuts for distributing subsidized fuels. With a higher distribution cost, the overall fuel subsidy will stand at more than Rp 32 trillion (around US$2.6 billion) as initially predicted, although the exact figure is still the subject of further discussions, said Energy and Mineral Resources Ministry’s director general for oil and has Evita H. Legowo, late on Wednesday. The new system will adopt a fixed payment for Pertamina. Previously, the payment, known as alpha, was calculated as a percentage of MOPS (Mean of Platts Singapore daily oil price traded). Initially, the alpha for 2009 was set at 8 percent of MOPS. "But, with the current lower crude price, i...