Jakarta (ANTARA News) - The government should exercise caution in setting the prices of premium gasoline and diesel oil for the April-June 2016 period due to a fluctuation of global oil prices, Executive Director of the Energy Watch Indonesia Ferdinand Hutahaean said.

The fuel prices for the period will surely use Mean of Plats Singapore (MOPS) for the January 25-March 24, 2016 period when the global oil price hit its record low, he said in a press statement released on Thursday.

If that is the case, the fuel prices will fall short of expectation at the expense of the governments and state oil and gas company Pertaminas interests, he said.

He noted that the global oil prices currently show an upward trend after they fell in January and February.

As per the energy and mineral resources ministers regulation number 39 of 2014, the fuel prices are set based on the average market price index and the rupiahs exchange rate against the US dollar using Bank Indonesias buy rate in the previous month ended on 24th.

The fuel prices for January-March 2016 period are based on MOPS and average exchange rate in the September 25-December 24 period. As a result, the diesel oil price is set at Rp5,650 per liter and non-subsidized premium gasoline price is set at Rp6,950 per liter for Java, Madura and Bali and at Rp7,050 per liter for the rest of the country.

According to Ferdinand, if the government lowers fuel prices according to the average MOPS for the January-March 2016 period, the decline will not automatically push up the economic growth.

"The government has no instrument in the field when the fuel prices fall. As a result, the prices of basic commodities including transportation cost decline," he said.

He proposed that the government change its fuel price policy by letting fuel prices to the market mechanism or adopting flat fuel price system by setting the upper and lower limits.

Since it is not allowed to let fuel prices to the market mechanism, the government should adopt flat fuel price system by setting the lower and upper limits, he said.(*)

Editor: Heru Purwanto
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