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Energy Ministry proposes revision of price formula for subsidized diesel

The energy ministry has proposed to revise the price formula for subsidized diesel fuel that effectively annuls the ministry's April decree, which lowered the formula's HIP benchmark from 100 percent to 95 percent.

Norman Harsono (The Jakarta Post)
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Mon, November 25, 2019 Published on Nov. 25, 2019 Published on 2019-11-25T11:42:48+07:00

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Gas pumps stand in a row at a gas station belonging to state-owned energy holding company Pertamina in Kuningan, South Jakarta. Gas pumps stand in a row at a gas station belonging to state-owned energy holding company Pertamina in Kuningan, South Jakarta. (The Jakarta Post/Seto Wardhana)

T

he Energy and Mineral Resources Ministry has submitted a proposal to the Finance Ministry on increasing the government payout to subsidized diesel distributors Pertamina and AKR Corporindo, so that the two companies would not incur l osses from distributing subsidized fuel.

The ministry's oil and gas director general, Djoko Siswanto, said in Jakarta on Nov. 11 that the directorate had sent a proposal letter to the Finance Ministry on revising the price formula for subsidized diesel fuel.

“The proposed change is in accordance with the Presidential Regulation. We have forwarded it to the Finance Ministry. Now, we wait,” he said, referring to Presidential Regulation No. 43/2018 on the supply, distribution and price of petroleum fuel. oil.

The regulation authorizes the Energy Minister to adjust the distribution price formula for subsidized and non-subsidized fuel.

The current per-liter price formula uses Rp 802 (5.7 US cents) as the base price, plus 95 percent of the Market Price Index (HIP). The proposed adjustment would raise the price to Rp 802 plus 100 percent of HIP, pegged to Singapore's diesel prices as published by the Mean of Platts Singapore (MOPS).

“We are still reviewing the proposal and will immediately inform the energy ministry when we have a decision,” Finance Ministry budget director general Askolani told The Jakarta Post on Friday.

The Finance Ministry is studying the impact that increasing the distribution price will have on the state budget and consumers.

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