Indonesian government proposes crude price assumption at US$70 per barrel

Indonesian government proposes crude price assumption at US$70 per barrel

Gas station in Jakarta. (ANTARA/Oky Lukmansyah)

A fixed subsidy on diesel has been proposed for the first time."
Jakarta (ANTARA News) - The government has proposed the assumed price of Indonesian crude price (ICP) in the Revised 2015 State Budget at US$70 per barrel.

Minister of Energy and Mineral Resources Sudirman Said in a working meeting with the Commission VII of the House of Representatives (DPR) here on Wednesday said the US$70 ICP proposal was in accordance with the world price trend.

"We propose the ICP at US$70 per barrel," Said stated.

The proposed price is lower than the realization of the ICP in 2014, which reached US100.48 per barrel.

For oil lifting, he noted, the assumed volume and proposal in the draft 2015 revised budget is 849,000 barrels per day, while for gas, it is 1.177 million barrels per day; the total volume of oil and gas lifting reaches 2.026 million barrels per day.

The proposed volume of subsidized fuels has been set at 17.9 million kiloliters: 17.05 million kiloliters diesel oil and 850,000 million kiloliters kerosene.

"This year, the government will no longer provide subsidy on premium gasoline so that fuel subsidy quota drastically drops from the realization in 2014, which stood at 46.79 million kiloliters that consisted of 29.63 million kiloliters of premium gasoline, 920,000 million kiloliters of kerosene, and 16.24 million kiloliters of diesel oil.

The quota for subsidized liquefied petroleum gas in 3- kilogram cylinders is expected to be set at 5.766 million tons.

The fixed subsidy on diesel oil has been proposed at Rp1,000 per liter, biodiesel at Rp5,000 per liter, bio-ethanol at Rp3,000 per liter, and LGV at Rp1,500 per liter.

"A fixed subsidy on diesel has been proposed for the first time," the minister added.

The minister remarked that the government has also proposed a subsidy on electricity at Rp67.66 trillion, which has included an addition of Rp1.3 trillion to compensate for the delay in raising the electricity tariff of household consumers with 1,300 VA and 2,200 VA.

Meanwhile on Monday, the government and Commission XI of the DPR agreed to lower economic growth assumption from 5.8 percent in the 2015 state budget to 5.7 percent in the draft 2015 revised state budget.

"A growth rate of 5.7 percent has been set as the target with extra efforts after considering the budget expenditure and quantitative easing in Europe and Japan," Finance Minister Bambang Brodjonegoro explained at a hearing with the DPRs Commission XI on Monday night.

Bambang stated that the baseline of the economic growth for 2015 has been predicted to decline considering the global economic conditions and falling world commodity prices.

Yet, the government is still doing its best to gain higher economic growth as it still has fiscal room for infrastructure expenditure and has financial additions following monetary stimulus by the European Central Bank.

"With the global economic downturns, the baseline of the countrys economic growth is 5.1 percent, plus 0.5 percent with extra efforts for changing the expenditure pattern of reallocating fuel oil subsidy and the 0.1 percent predicted positive impact of quantitative easing," Bambang said.
(Uu.A014/INE/KR-BSR/H-YH)

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