"Since the beginning, we have decided a pattern of fuel oil price adjustment to be implemented every three months," Minister Said remarked at an energy seminar in Jakarta on Thursday.
He was referring to the governments third phase of the economic policy package, which included lowering the prices of diesel oil, aircraft fuel (avtur), liquefied petroleum gas (LPG), Pertamax gasoline, and Pertalite fuel.
Besides this, the minister also explained the governments reasons to lower the prices of fuels, except that of premium gasoline whose price remains unchanged.
"In nature, it is a multiple price-cut on fuels, such as avtur (aircraft fuel) and diesel oil, which are commonly used for transportation," Said explained.
On Wednesday, Sept. 7, the government announced the third phase of its economic policy package focusing on several fields, which are expected to benefit businesses in the manufacturing sector.
"In this third tranche of the policy package, the government emphasizes on how to reduce (production) costs," Chief Economic Minister Darmin Nasution noted in press statement on Wednesday.
He said there were two main issues to be explained by the minister of energy and mineral resources and the agrarian and spatial planning minister.
According to Nasution, the policy on the energy sector covered new prices of fuel oils (BBM) as well as gas and electricity tariffs for the industry.
The effects of lowering BBM prices, some of which took effect on October 1, 2015, are expected to be felt by businesses in the manufacturing sector, so that the economy could be boosted.
"The price of premium gasoline cannot yet be lowered because it still has to reach its economic value set by Pertamina. The price of diesel oil has been reduced by Rp200 from Rp6,900 to Rp6,700 per liter and will take effect three days after this announcement. We need logistical preparations to reduce the price of premium gasoline," he said.
Therefore, the price of premium gasoline will remain unchanged at Rp7,400 per liter for Java, Madura and Bali and Rp7,300 per liter for the rest of the country.
"The price of aviation turbine (avtur) fuel for international flights will fall by 5.33 percent or approximately 10 cents US dollar, and for domestic flights by 1.4 percent as Pertamina has to supply avtur to all airports in Indonesia," he said.
The minister said the price of liquefied petroleum gas (LPG) in 12-kilogram cylinders has been reduced by 4.72 percent to Rp134,000 from Rp141,000. The new price took effect on September 16, 2015.
The price of pertamax gasoline has been reduced to Rp9,000 from Rp9,250 per liter since October 1, 2015, he said.
"Although pertalite gasoline is still being sold at a discounted price, Pertamina has reduced its price by 1.2 percent to Rp8,300 from Rp8,400 per liter," he said.
He did not rule out the possibility that the fuel prices will be lowered again if the government sees efficiency, the rupiah strengthens against the US dollar and the Indonesian Crude Price (ICP) remains stable.
"Now that fuel oils are no longer subsidized commodities, their prices will continue to be adjusted to achieve their economic prices," he said.
President Joko Widodo had earlier stressed three points that could be accounted for by the energy and mineral resources minister in lowering the prices of BBM.
"We will finalize the concept based on the presidents directives on three main points," Minister Said asserted after being received by the president on Wednesday.
Based on the presidents directives, the three main points encompass the governments intentions to provide stimulus to the industry to ensure the efficient use of energy.
According to the second point, the government must be consistent in diverting oil subsidy to the productive sectors. The third point is that the government should not interfere in the affairs of the state-owned companies.
The change in prices should have cleared an efficiency process. "State-owned oil and gas company Pertamina should not continue to bear the losses. It should increase efficiency. No matter how much the change is, the prices should be based on economic viability," Minister Said stressed.
In the meantime, oil observer Kurtubi stated that the government could lower the price of BBM by Rp1,000 per liter by taking into account the world crude price and the value of the rupiah exchange rate against the US dollar.
"With the crude price at US$50 per barrel and the rupiah exchange rate at Rp15 thousand per US dollar, there is room for the government to lower the oil price by Rp1,000 per liter," Kurtubi noted in a written statement on Tuesday.
In line with the drop in crude price in the world market, Kurtubi, who is a member of Commission VII on energy affairs of the House of Representatives (DPR), said the government could lower the price of BBM at home.
He remarked that the lowering of the oil prices could boost national economic growth as it will increase the peoples purchasing power amid the current global economic slowdown.
"What is sure is that it will raise public consumption and boost economic growth. After all, expenditure funds from the state budget and the government spending have begun to be disbursed," he added.(*)
Reporter: Andi Abdussalam
Editor: Heru Purwanto
Copyright © ANTARA 2015
