Stagewise implementation of increase in subsidized fuel oil prices needed: Energy Board

Stagewise implementation of increase in subsidized fuel oil prices needed: Energy Board

Photo document of gas station in Jakarta. (ANTARA/Fanny Octavianus)

Jakarta (ANTARA News) - The increase in subsidized fuel oil prices should be implemented in stages in accordance with the fiscal security consideration, stated Tumiran, the Indonesian National Energy Board member.

"It is better to be implemented in stages, and the figure of increase should be adapted to the level of fiscal security, although the maximum increase is between Rp2 thousand to Rp2.5 thousand," Tumiran noted here on Wednesday.

According to him, the increase in subsidized fuel oil prices was considered the best possible step to solve the problem of trade balance deficit resulting from imports and large sums of subsidies.

Tumiran opined that it was much better for the government to reduce the dependence on imports and subsidies by allocating the funds spent on them for improving infrastructure to boost the other economic sectors.

"Our subsidies and imports are big. Therefore, I agree that the price of subsidized fuel oil should be increased, and the money should be allocated to the other economic sectors," he noted.

But, he also urged the government to make necessary improvements by accelerating infrastructure development, new and renewable energy development, and the development of the domestic energy industry.

Earlier, the transitional team of Joko Widodo-Jusuf Kalla government had planned to raise the subsidized fuel oil prices by Rp three thousand in November 2014.

According to Bank Indonesia Senior Deputy Governor Mirza Adityaswara, an increase in the price of subsidized fuel oil of Rp1,000 per liter would contribute 1-1.5 percent to the inflation rate.

"Any rise of Rp1,000 per liter will contribute 1 to 1.5 percent to the inflation rate at the end of 2014. So, if the price of subsidized fuel is raised by Rp3,000 per liter, it will contribute 3 to 4.5 percent to the inflation rate," he remarked here recently.
(Uu.O001/INE/KR-BSR/F001)

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