Indonesian gov't likely to raise fuel subsidy: minister

17:01, July 08, 2010      

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The Indonesian government is considering allocating an additional fuel subsidy as consumption of subsidized fuels is likely to exceed initial estimates, the Jakarta Post quoted a minister as saying on Thursday.

"It seems the realized consumption will be more than ( initially estimated). If it turns out to be higher, of course there will be an additional subsidy," said Finance Minister Agus Martowardojo, referring to the targeted consumption of 36.5 million kiloliters as stated in the 2010 state budget revision.

The government has allocated 88.9 trillion rupiah (9.78 billion U.S. dollars) in fuel subsidies in the budget revision, based on the targeted consumption of subsidized fuels and an Indonesian Crude Price (ICP) of 80 dollars per barrel.

According to Agus, there is an allocated fund of 3 trillion rupiah to create a "fiscal risk cushion" in the budget revision that can be used for fuel subsidies.

"There is also room in the allocated fuel subsidy for a lower ICP rate," he said, adding that the ICP currently stands at about 72-73 dollars per barrel.

A lower ICP rate means the 88.9-trillion-rupiah fuel subsidy can be used to fund more kiloliters of subsidized fuels.



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