Government to raise energy subsidies in 2018

Jakarta (ANTARA News) - The government will increase energy subsidy allocation this year as a result of the increase in the world crude prices, which exceed the state budget assumption at US$48 per barrel.

"The energy and mineral resources minister and the state-enterprises minister have calculated the needed subsidy addition yesterday," Finance Minister Sri Mulyani said in Jakarta on Tuesday.

Mulyani stated that the increase in the energy subsidies included diesel oil for state-owned oil and gas firm Pertamina. It will receive additional subsidy from the current allocation of Rp500 per liter.

"The subsidy for diesel oil in the state budget law was decided at Rp500 per liter. However, it is no longer adequate based on the daily condition. We are now calculating how much an additional subsidy would be needed, and we will report it to the House of Representatives (DPR)," Mulyani noted.

The increase in energy subsidies is also related to the adjustment of the coal price in the domestic market (DMO) for electricity-generating plants managed by the state-owned electricity company PLN.

In this connection, the government has also calculated all the state receipt potentials from tax and non-tax sectors, which will be lost from coal exploitation.

"This is because coal companies are forced to sell at the same price as DMO, meaning the market price. We have also computed it," she remarked.

She added that the whole amount of energy subsidy addition will be revealed at the semester report on implementation of the 2018 State Budget that will be delivered to the DPR.

But the minister assured that the increase in the subsidy allocations would not disturb the balance sheets of Pertamina and PLN. It will remain to maintain the budget deficit set at 2.19 percent of the Gross Domestic Product.

"We will carry out these policies in the framework of maintaining the credibility and stability of the macro-policies.

The state budget will remain healthy, while the public trust on the fiscal sector will not be eroded," the minister added.

Current energy subsidies in the 2018 state budget are set at Rp94.53 trillion, consisting of fuel subsidies amounting to Rp46, 9 trillion and electricity subsidies valued at Rp47.7 trillion.

Based on the governments interim calculations, the increase in subsidies for diesel is projected to reach around Rp700 per liter to Rp1 thousand per liter from the current price of Rp500 per liter.

Meanwhile, world oil price reached an average of $61.61 per barrel in February 2018, higher than the assumption of the State Budget of $48 per barrel.

Source: ANTARA News

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