Indonesia Raises Subsidized Fuel Prices by Rp 2,000 a Liter

Jakarta Globe, Dion Bisara, Nov 17, 2014

(Antara Photo/Fanny Octavianus)

Jakarta. Indonesia raised subsidized fuel prices by an average Rp 2,000 per liter, in an attempt to curb fuel usage and narrow the gaps in the current account and the state budget.

The price for low-octane gasoline, or Premium, will rise to Rp 8,500 per liter, from Rp 6,500. Subsidized diesel was raised to Rp 7,500 per liter from Rp 5,500. The prices would go into effect at midnight on Monday.

The move would also help to reduce state expenses on the subsidy and that money could be used for other programs such as education and health care.

President Joko Widodo announced the prices increases at around 9:10 p.m. on Monday in an address that was broadcast via television.

“The increase is moderate even by recent latest increases standard because we see a decline in global oil price trend,” said Energy and Mineral Resources Minister Sudirman Said before the announcement.

Sofyan Djalil, the coordinating minister for economic affairs, said in a press briefing on Monday that the government has so much infrastructure that needs to be built that “we need to save some of our budget for productive spending.”

Bambang Brodjonegoro, the finance minister, said that the increase will save Rp 120 trillion ($9.8 billion) in the 2015 state budget.

Indonesia’s current account deficit has narrowed to 3 percent of gross domestic product in the third quarter from 4.3 percent of GDP in the previous three-month period.

The government last raised subsidized fuel prices in June 2013 by an average Rp 3,000 a liter.