Jakarta (ANTARA) - Chair of Commission VII of the House of Representatives (DPR) Sugeng Suparwoto urged the president-elect for the 2024-2029 period, Prabowo Subianto, to be committed to carrying out energy transition.

"Energy transition is a necessity. We have to enter (the era of) EBT (new and renewable energy) because, for fossil, oil is already in deficit," he noted in a DPR statement received here on Monday.

According to Suparwoto, Indonesia's economy will experience pressure if energy subsidies increase amid rising world oil prices and the weakening of the rupiah against the US dollar.

"(The economy will experience pressure) if (the price of) crude oil reaches almost US$95 (per barrel; moreover, if the (exchange rate of) the US dollar reaches Rp17 thousand (per US dollar)," he explained.

The average Indonesian Crude Price (ICP) from January to May 2024 stood at around US$81.52 per barrel.

Meanwhile, the ICP assumption based on the 2024 State Budget is US$82 per barrel.

Suparwoto noted that in April 2024, the average ICP reached US$87.61 per barrel, an increase of US$3.83, from the March ICP of US$83.78 per barrel.

He attributed the spike to tensions in the Middle East, which sparked market concerns about oil supply disruptions.

Meanwhile, the rupiah exchange rate against the US dollar has currently reached Rp16,200 per dollar.

This figure is above the assumption of several economists of Rp15,500 per dollar and far above the macro assumption of the 2024 State Budget pegged at Rp15,000 per dollar.

"The ICP has surpassed the projection of US$82 (per barrel). As of today, the average is around US$87 (per barrel). Thus, there is a difference of US$5 and an exchange rate difference of more or less Rp700. Hence, that is a double hit," he remarked.

Nevertheless, it was said that the increase in energy subsidies due to rising world crude oil prices and the weakening of the rupiah exchange rate against the US dollar does not necessarily mean that the government should immediately take shortcuts, such as increasing fuel prices.

"If it has to increase fuel prices, the consequence will be an increase in inflation. Furthermore, the consequence will be increasing poverty," he stated.

Related news: Indonesia outlines energy transition strategies in ETC meeting
Related news: Oil and gas remain important amid global energy transition: Minister
Related news: Government formulating subsidy for bioethanol fuel: Minister

Translator: Putu Indah, Raka Adji
Editor: Azis Kurmala
Copyright © ANTARA 2024