Energy Ministry Told to Focus on Controlling Subsidized Fuel Consumption

Jakarta - Finance Minister Agus Martowardojo has asked the Energy and Mineral Resources Ministry to focus on controlling subsidized fuel consumption this year to avoid a surge in energy subsidy. "If a surge in energy subsidy happens again this year it will be dangerous to fiscal sustainability," he said in a press conference here on Monday. The government may raise the prices of subsidized fuels if the energy and mineral resources ministry fails to control subsidized fuel consumption, he said. "We still rely on control efforts. At this moment we cannot disclose a definite plan for fuel price hike," he said. Fuel oil subsidy last year reached Rp306.5 trillion or 154.2 percent of the target of Rp201.4 trillion in the revised 2012 state budget. Meanwhile, electricity subsidy reached Rp94.6 trillion or 145.6 percent of the target of Rp65 trillion. The higher fuel subsidy was caused by the higher-than-assumed Indonesian crude price (ICP), the US dollar's strengthening against the rupiah, and high subsidized fuel consumption. ICP reached US$105 a barrel last year compared to the assumed US$105 a barrel. The US dollar's exchange rate against the rupiah averaged Rp9,384 compared to the assumed Rp9,000 per dollar. Subsidized fuel consumption reached 45.2 million kiloliters last year, well above the target of 40 million kiloliters set in the revised 2012 state budget. (*)