"The fuel subsidy is likely to increase to Rp137.4 trillion from Rp123.6 trillion," Finance Minister Agus Martowardojo said at a meeting with the House of Representatives (DPR)`s Budgetary Board.
Jakarta (ANTARA News) - The Indonesian government has proposed an 11.1 percent increase in spending on fuel subsidies in the revised 2012 state budget to Rp137.4 trillion from the ceiling of Rp123.6 trillion.

"The fuel subsidy is likely to increase to Rp137.4 trillion from Rp123.6 trillion," Finance Minister Agus Martowardojo said at a meeting with the House of Representatives (DPR)`s Budgetary Board in Jakarta on Wednesday night.

The increase is the result of the rising crude oil prices, which are expected to average US$105 per barrel in addition to an extra subsidy of Rp54 billion for the fuel-to-gas conversion program, he said.

The government also proposed a cut in the fuel subsidy by, among others, raising the price of subsidized premium gasoline to Rp6,000 per liter from Rp4,500 per liter beginning in April 2012, he said.

"It will be quite proper if the fuel price is raised in April as the inflation rate is still low," he said.

Under Article 7 Para (6) of the Bill on the revised 2012 state budget, the government has the authority to raise fuel prices if the estimated average oil price throughout the year exceeded 5 percent of the Indonesia Crude Price (ICP).

To prevent subsidized oil consumption from exceeding 40 million kiloliters this year, the government will reduce subsidized fuel consumption in stages by optimizing a number of programs.

The programs include the kerosene-to-gas conversion program, gasoline-to-gas conversion program, the use of alternative energy, and the control of oil consumption.

The state spending on the electrical power subsidy is also expected to increase by 107 percent to Rp93 trillion from the budget ceiling of Rp44.9 trillion.

The delayed operation of the Floating Storage Regasificaton Unit (FRSU) and the increase in coal prices are among other factors contributing to the increase in the electrical power subsidy.

The government expects the deliberations on the revised 2012 state budget with the House of Representatives to be completed by March 29, 2012.(*)

Editor: Heru Purwanto
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