Indonesia Doubling Transport Budget With $10 Billion Fuel Saving

Jakarta Globe, Sharon Chen,  Jan 05, 2015

Motorists ride their motorbikes between cars during rush hour on a main road
in Jakarta on Nov. 28, 2014. (EPA Photo/Mast Irham)

Jakarta. Indonesia will save about $10 billion from the biggest overhaul of its decades-old fuel subsidy system, allowing the government to double spending on transportation, agriculture and public works, the energy minister said.

The finance ministry estimates that at least 120 trillion rupiah ($10 billion) in savings will be made this year, and the number will increase in coming years, said Energy and Mineral Resources Minister Sudirman Said in a Bloomberg Television interview with Angie Lau on Monday.

“What happened is shifting the subsidy from consumption into more productive spending,” the minister said.

“Because of the policy this year 2015, the public works, the transportation sector and the agriculture will double the capital expenditure budget.”

President Joko Widodo scrapped the subsidy for gasoline on Jan. 1 and capped the amount of aid for diesel, joining India and Malaysia in taking advantage of plunging oil prices to wean their nations off government subsidized fuel. Indonesia had been subsidizing fuel since the first oil price shock in the 1970s and kept prices at less than $0.20 per liter until 2005, according to a World Bank report published in March.

The government plans to double spending on transportation from last year, according to Said. The budget for public works such as roads, housing and irrigation will be more than twice the original allocation and more money will be set aside for farmers and the agriculture sector, he said. Building infrastructure for the oil and gas industry and electricity will be part of the government’s focus this year, he said.

Dismantling the subsidy program is a political hot potato — protests accompanied past price increases and riots spurred by soaring living costs helped oust dictator Suharto in 1998.

“The challenge would be of course the response from the public, but I have confidence that if we communicate well, then they will understand” and in the longer term it is going to be a much better budget structure, the minister said.

Bloomberg

Indonesia Raises Subsidized Fuel Prices by Rp 2,000 a Liter

Jakarta Globe, Dion Bisara, Nov 17, 2014

(Antara Photo/Fanny Octavianus)

Jakarta. Indonesia raised subsidized fuel prices by an average Rp 2,000 per liter, in an attempt to curb fuel usage and narrow the gaps in the current account and the state budget.

The price for low-octane gasoline, or Premium, will rise to Rp 8,500 per liter, from Rp 6,500. Subsidized diesel was raised to Rp 7,500 per liter from Rp 5,500. The prices would go into effect at midnight on Monday.

The move would also help to reduce state expenses on the subsidy and that money could be used for other programs such as education and health care.

President Joko Widodo announced the prices increases at around 9:10 p.m. on Monday in an address that was broadcast via television.

“The increase is moderate even by recent latest increases standard because we see a decline in global oil price trend,” said Energy and Mineral Resources Minister Sudirman Said before the announcement.

Sofyan Djalil, the coordinating minister for economic affairs, said in a press briefing on Monday that the government has so much infrastructure that needs to be built that “we need to save some of our budget for productive spending.”

Bambang Brodjonegoro, the finance minister, said that the increase will save Rp 120 trillion ($9.8 billion) in the 2015 state budget.

Indonesia’s current account deficit has narrowed to 3 percent of gross domestic product in the third quarter from 4.3 percent of GDP in the previous three-month period.

The government last raised subsidized fuel prices in June 2013 by an average Rp 3,000 a liter.

Indonesian Poor to Receive Rp 14 Trillion in Aid Ahead of Fuel Hike

Jakarta Globe, Ezra Sihite, May 13, 2013

A street vendor sells fuel in a plastic containers in Samarinda,

 East Kalimantan on March 24, 2013. (Reuters Photo)

The Indonesian government is poised to distribute up to Rp 14 trillion ($1.4 billion) in aid to the poor ahead of the central government’s planned fuel price hike.

The central government is trying to ween Indonesian motorists off the nation’s costly fuel subsidies — which cost the state some Rp 211.9 trillion in 2012 and heavily favor middle class drivers. President Susilo Bambang Yudhoyono has issued instructions which require the government to simultaneously slash fuel subsidies and increase welfare spending.

This round of payouts will reach some 15.5 million households living on less than $2 a day, Coordinating Minister of Welfare Agung Laksono said. Additional spending in the form of school aid and subsidized rice will be handed out as the fuel subsidy cuts take effect, Agung explained.

The coordinating minister said the government must spend some of the savings on the nation’s poor.

“The potential budget savings [from subsidy cuts] is up to Rp 37 trillion,” he said. “It must be returned to the poor people through compensation programs and also infrastructure development.”

Previous efforts to raise the price of subsidized fuel sparked days of chaotic protests. The plan was scuttled by Golkar Party and Prosperous Justice Party (PKS) factions in the House as protests peaked in Jakarta.

Critics of the plan argue that higher fuel prices will hurt the poor by causing food prices to rise. But the government spends more on energy subsidies than it spends on either education or health care.

The government has floated raising the price of premium subsidized fuel from Rp 4,500 per liter to Rp 6,000. The price hike is expected to take effect next month.

Govt preparing compensation for poor affected by fuel price hike

Antara News, Sat, February 25 2012

 "It is not yet final and still has yet to be discussed with the DPR. But it is certain that the poor`s income must be raised. It would be a pity if it is not," Social Affairs Minister Salim Segaf Al Jufri said.

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Jakarta (ANTARA News) - The government will immediately discuss compensation for the poor who will be affected by the planned fuel price hike with the House of Representatives (DPR), Social Affairs Minister Salim Segaf Al Jufri said.

"It is not yet final and still has yet to be discussed with the DPR. But it is certain that the poor`s income must be raised. It would be a pity if it is not," he said here on Friday.

He said the government still had time to discuss the matter before the revised budget is passed and subsidized fuel oil prices are adjusted.

"We will decide about it later. We still have time for it," he said.

He said the government has had an experience in providing compensations for the poor such as in the form of cash handout (BLT) when the fuel price was raised in 2005 and 2008.

He said the government so far has not yet made any decision regarding the amount of the BLT to be given like several years ago.

"It has not been decided. It may be higher or lower. It is not yet final," he said.

Salim said his office still has data of those eligible for the cash handout. "We have the data. It will be us who will distribute it perhaps with the help of PT POS, BRI and other banks," he said.

The minister of development planning, Armida S Alisjahbana, meanwhile said that the cash handout is a short-term policy. She said the government could also expand the hopeful family program to assure that poor families receive immunization and proper education.

"We wish the next generation will be healthier and more educated to cut cycle of poverty," she said.

Armida said the cash handout in a short term could help the poor meet their basic needs such as rice while the benefit of the hopeful family program is long-term.

"The BLT is an option because in Cluster One it no longer exists. We wish it is the hopeful family program that will be carried out so that they would not become poor. BLT is only for emergency so that people have money to buy rice," she said.

Editor: Heru

Cars for high officials to switch from gasoline to gas

Bagus BT Saragih, The Jakarta Post, Jakarta, Mon, 01/16/2012

The government plans to equip all official cars used by President Susilo Bambang Yudhoyono’s Cabinet members and other high-level state officials with gas converter kits as part of the oil-to-gas conversion program.

“We have appointed [state-owned aircraft maker] PT Dirgantara Indonesia to produce the kits. But if the company fails to provide all the demanded kits, we will import more kits to fill the gap,” Coordinating People’s Welfare Minister Agung Laksono told reporters at the presidential office on Monday.

Agung added that the government expected to reach its goal by April.

The oil-to-gas conversion campaign was launched to support government plans to limit the amount of subsidized fuel used by private cars in Java and Bali, which will be gradually carried out from April.

The government hopes the program will allow it to reduce the fuel subsidy.(dic)

Related Article:

Public cars to get free gas converter kits: Govt

Dutch car fuel prices at record high

RNW, 13 January 2012

The price of petrol has never been so high in the Netherlands as at present. The recommended retail price for gasoline stands at over 1.75 euros a litre. Diesel is now at nearly 1.5 euros a litre, just one euro-cent short of the record high.

“At present prices, the average motorist will spend about 100 euros more on fuel this year than in 2011,” says a spokesperson from the United Consumers group.

Prices have been driven up on the international oil market over recent months. This is being blamed on tensions between Iran and the West and on the unrest in Syria.

Dutch fuel levies also went up at the start of 2012. They are now reported to be the highest in Europe. The fall of the value of the euro against the US dollar has also had an effect as oil is paid for in dollars. This has also pushed Dutch fuel prices up.

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Sorry, Private Vehicles are Not Allowed to Use Subsidized Fuel!

Tempo Interactive, Friday, 12 March, 2010 | 21:42 WIB

TEMPO Interactive, Jakarta: The government is to forbid the use of subsidized fuel for private vehicles.

"We are serious about this," said the Minister of Energy and Mineral Resources Darwin Zahedy Saleh in Jakarta, on Friday (12/3).

He said that this measure was being taken because the government had had a hard time controlling the global crude oil price which impacted on fuel subsidies.

Besides that, according to him, the subsidies should be aimed at poor people.

Darwin hoped that it could be applied this year.

“We are starting to design a trial (in Bintan and Bangka Belitung), but we do not know its realization yet,” he said.

Minister of Finance Sri Mulyani previously said that fuel subsidies this year would increase from Rp89.3 trillion to Rp98.7 trillion.

This subsidy increase was because of changes in macro assumptions and fuel price benchmarks in the budget.

The government proposes an oil price assumption from between US$65 to US$77 per barrel.

Darwin confirmed that the government would not increase subsidized fuel prices this year, even though the global fuel price right now is in the range of US$ 80 per barrel.

“We will try not to increase them unless absolutely necessary,” said Darwin.

He explained that the Indonesia Crude Price (ICP) tolerated by the 2010 State Budget, if approved by the House of Representatives, was 10 percent of US$ 77 per barrel.

"If the ICP is still US$85, then the state budget is safe," he said.

The Director General of Oil and Natural Gas at the Energy and Mineral Resources Ministry Evita Herawati Legowo said that the ICP price for all this year was around US$80 per barrel.

"The premium economic price is US$1 per liter (Rp9,300 against the US$)," she said.

SORTA TOBING

Govt not to raise fuel oil prices this year: minister

Antara News, Tuesday, January 12, 2010 23:02 WIB

Jakarta (ANTARA News) - The government gave assurance on Tuesday that it will not raise domestic fuel oil prices although global oil prices are escalating to the level of US$80 a barrel, a minister said.

The current rise in global oil prices had prompted the government to change the assumed oil price in the 2010 state budget to US$80 from US$65 a barrel, Finance Minister Sri Mulyani Indrawati said at the presidential office here.

"We have just discussed energy subsidy. Since there will be no domestic fuel oil price hike oil subsidy will be raised," she said after attending a limited cabinet meeting.

The minister said a change in the assumed oil price to U$80 from US$65 a barrel and the rupiah`s exchange rate to Rp9,500 from Rp10,000 per dollar will increase fuel oil subsidy to Rp96.1 trillion from Rp68 trillion.

Electricity subsidy is projected to increase to Rp53.2 trillion from Rp37.8 trillion and rice and fertilizer subsidy to Rp59.5 trillion from Rp51.3 trillion, she said.

"However, the government will receive an additional state revenue of Rp39 trillion from oil price hike," she said.

She said the government will also raise the inflation rate target to 5.5 percent from 5 percent and the assumed interest rate on Bank Indonesia promissory notes (SBI) for three-month deposit to 6.8 percent from 6.5 percent.

Given the change in macro-economic assumptions, state receipts and expenditures in the 2010 state budget will change with the budget deficit expected to soar to Rp128.7 trillion or 2.2 percent of the gross domestic product (GDP), from Rp1.8 trillion or 1.8 percent of the GDP, she said.

She said the government has decided to use 2009 state budget leftover amounting to Rp38 trillion to meet part of financing target in the 2010 state budget.

Pertamina Loses Monopoly on Domestic Subsidized Oil Products

The Jakarta Globe

An Indonesian worker rides a bike past barrels of oil at a Pertamina depot. (Photo: Bagus Indahono, EPA)

Indonesia’s state oil firm Pertamina has lost its exclusive right to distribute subsidized oil products in 2010 after a unit of Malaysia’s Petronas and a local firm won supply tenders, a regulator said on Monday.

Petronas has won the right to distribute 20,440 kiloliters (128,547 barrels) of subsidized low-octane gasoline in the city of Medan, North Sumatra, next year, the head of Indonesia’s downstream oil regulator, BPH-MIGAS, said.

Indonesia’s PT Aneka Kimia Raya (AKR) Corporindo would also distribute 56,500 kiloliters (335,328 barrels) of subsidized diesel oil in Lampung province, in South Sumatra and in the cities of Banjarmasin and Pontianak in Kalimantan.

“By law, Petronas and PT AKR Corporindo are allowed to supply subsidized fuel. After we evaluated their capabilities in providing fuel, we selected them,” Tubagus Haryono, head of BPH-MIGAS, told reporters.

The remaining subsidized fuel would be supplied by Pertamina in 2010.

Overall, the government planned to supply of 21.4 million kiloliters (134.5 million barrels) of subsidised gasoline and 11.2 million kiloliter of subsidized diesel oil in 2010, Haryono said.

This year, Indonesia expects 19.44 million kiloliters of subsidized low-octane gasoline and 11.6 million kiloliter of diesel to be supplied.

BPH-MIGAS decides each year on the rights to supply and distribute subsidised oil products such as low-octane gasoline, kerosene and diesel.

Royal Dutch Shell Plc had also joined the tender to distribute fuel this year.

“The volume of subsidized gasoline and diesel is expected to be higher than the government’s 2009 plan, due to higher transportation consumption,” Haryono said without elaborating.

Separately, the director general of oil and gas at the energy ministry, Evita Legowo, said the government wanted the supply of subsidized fuel to be cut in the future.

The level of consumption of fuel is critical because it helps determine the scale of subsidies the government has to set aside in the budget.

Pertamina’s monopoly over all sectors of the oil market was ended in 2001, and three years later Indonesia opened up its domestic downstream oil business to foreign firms, paving the way for them to directly import fuel and sell to local customers.

But Pertamina had up until now retained the exclusive rights to supply subsidized oil products — which includes almost all products except for premium motor fuel — in the domestic market.

Reuters

All Indonesia to Pay Same Price for Fuel Next Month

The Jakarta Globe, Yessar Rosendar

Indonesian consumers will pay the same price for gasoline beginning next month no matter where they live, following the implementation of an Energy Ministry regulation requiring fuel distribution costs to be covered by the government.

The government subsidizes fuel but consumers in different parts of the country pay different prices due to varying distribution costs. For example, in parts of Papua motorists pay as much as Rp 35,000 ($3.68) a liter because of high delivery costs.

Beginning in January, everyone will pay Rp 4,500 a liter, said Hanung Budya, Pertamina’s deputy director for marketing and business, on Tuesday.

The new policy is intended to stimulate growth in isolated regions, he said.

“When the price is the same, people can spend more on fuel.”

Hanung also said Pertamina is aiming to complete its kerosene-to-liquified petroleum gas (LPG) program next year as planned, resulting in 53 million households in 27 provinces shifting from kerosene to LPG.

“We should complete the conversion program in 2010,” he said.

The program is intended to cut the amount the government pays in fuel subsidies as LPG is cheaper than kerosene. Currently, more than half of the Rp 50 trillion the government pays in fuel subsidies a year goes to kerosene.

Hanung estimated the conversion program would reduce the amount the government paid in subsidies next year by Rp 10.4 trillion.

However, Pri Agung Rakhmanto, an energy analyst at the Reforminer Institute, noted that the domestic supply of LPG was not sufficient. “We still have to import it next year,” he said.

KPPU Targets Airlines with Unfair Business

Kompas, Jimbon, FRIDAY, 13 NOVEMBER 2009 | 3:48 PM

Boeing 747 refueling at Internasional Airport Juanda, Surabaya, East Java Timur (KOMPAS/IWAN SETIYAWAN)

JAKARTA, KOMPAS.com — Efforts from The Business Competition Supervisory Commission (KPPU) to prove the existence of a cartel in fixing the fuel surcharge is quite serious. Now, the KPPU intends to charge a number of airlines with a new chapter of law.

Previously, KPPU accused a violation of fuel surcharge by 12 airlines. KPPU considered this practice to be in violation of Chapter 5 of the Law No. 5, 1999, regarding the prohibition of monopoly practices and unfair business competition. The conclusion was, that there were indications that the airlines made a unilateral agreement to fix the price.

Now, the KPPU will charge with another chapter. "We will have a new chapter, which is chapter 21. The indication will be that an airline has done an unfair practice by fixing unilaterally the fuel surcharge price," said the Communications Director of KPPU, Ahmad Junaidi, Thursday.

Based on chapter 21, the KPPU will charge the airlines for fixing the unilateral fuel surcharge price that tends to go up every year.

Seeing that the indication of unfair practice of the fuel surcharge case getting worse, now the KPPU has elevated the status of this case from preliminary investigation to follow-up investigation by upholding No. 1036/KPPU/PEN/XI/2009. "It was decided on November 9, with an investigation period of 60 days, plus 30 working days if required," said Ahmad.

However, so far only some of the 12 airlines have fulfilled KPPU's summons. Six other companies are still waiting for the reschedule of their summons - PT Kartika Airlines, PT Trigana Air Services, PT Mandala Airlines, PT Travel Express Aviation, PT Linus Airways, and PT Sriwijaya Air.

The effect of KPPU's investigation has caused the airlines to adapt with the situation. Currently, the Department of Transportation and the airlines has planned to include fuel surcharge price as a tariff component.

Not all airlines agree yet with the plan. But at least there is an effort to clarify the fuel surcharge.

"The calculations have been set, it's only a matter of setting the agreement. We will discuss this with the KPPU," said Managing Director of Lion Air, Edward Sirait some time ago. (Yudho Winarto, Gentur Putro Jati/Kontan/C17-09)

Petrol pain

The Jakarta Post   |  Mon, 03/02/2009 12:21 PM 
 

 Cars enter a Jakarta gas station Sunday. Effective as of March 1, state oil and gas firm PT Pertamina increased the cost of the non subsidized fuels of Pertamax, Pertamax Plus by Rp 300 per liter, the first hike this year. JP/Ricky Yudhistira

Indonesia says plans to subsidise biofuel in 2009

Fri Jan 30, 2009 8:42am GMT  

JAKARTA, Jan 30 (Reuters) - Indonesia's government is planning to pay a subsidy to biofuel producers starting this year to encourage them to remain in the business and promote widespread use of the alternative energy source, an energy ministry official said on Friday. 

The government wants to make the use of biofuel mandatory from this year to ensure the survival of the fledgling industry, an aim made more urgent since biofuel became more expensive than crude oil-based fuel after oil prices dived more than 70 percent from their peak in July last year. 

"We will only pay the subsidy if biofuel prices are higher than crude oil-based fuels," Evita Legowo, director general of oil and gas at the energy ministry told Reuters. 

Under the plan, if prices of biofuel products are higher than crude oil-based fuels, the government will pay subsidy of 1,000 rupiah ($0.08) per litre on average. 

"At the moment, palm-based biodiesel is more expensive than crude oil-based diesel, but prices of bioethanol are not," Legowo said. 

Bioethanol is made using both cassava and cane molasses. 

Palm biofuel and bioethanol compete with cheap domestic petrol diesel in Indonesia, one of the lowest priced in Asia because of generous government subsidies. 

Palm-based biodiesel prices were around 5,800 rupiah per litre on Friday, or about 1,500 rupiah higher than diesel, said Paulus Tjakrawan, secretary general of Indoesian Biofuel Producers Association. 

State run PT Pertamina, which sells subsidised fuel products, is estimated to blend 194,444 kilo litres of bioethanol and 580,025 kiloliters of palm-based biodiesel in 2009, a government document showed. 

Based on such an estimate, the government may have to allocate 774.5 billion rupiah in biofuel subsidies this year. 

A ministerial decree issued last November stated that for biodiesel used in transportation, there must use a blend of 1 percent palm-based biodiesel and 99 percent diesel oil, while industry and power plants should use a blend containing 2.5 percent and 0.25 percent palm-based biodiesel respectively. 

By 2010, the palm-biodiesel content will be increased to between 2.5-3 percent for transportation, 5 percent for industry, and 1 percent for power plants. 

For bioethanol, the use of a 1-5 percent blend of bioethanol and 99-95 percent of gasoline for transportation become mandatory this year. 

"Currently, the biodiesel blend for transportation has reached 5 percent," Legowo said. 

Indonesia, the world's top producer of palm oil, used in a wide range of products from soap to biodiesel, is estimated to turn out 20.25 million tonnes of palm oil in 2009, up from 18.8 million in 2008, the industry association has estimated. 

The increased use of palm oil for biodiesel is important to help ease the country's palm oil stocks, a key factor supporting palm prices despite the gloomy global demand outlook. (Reporting by Aloysius Bhui; Editing by Ben Tan) 

Council nods on 20% fare cut

Fri, 01/23/2009 4:03 PM, The Jakarta Post 

After a week of a debacle over the reduction of public transportation fares following the recent fuel price cuts, the City Council finally approved Thursday a cut of Rp 500 or 20 percent, for minivan and regular bus fares. 

Once the reduction is enacted, the fares will be the same as before the fuel price hikes in May last year. “Fares for limited-seat and economy-class buses will be reduced to Rp 2,000 [from current Rp 2,500], while fares for minivans will be axed to Rp 2,500 [from Rp 3,000],” council’s deputy speaker Dani Anwar said. 

Dani said the decision was final since it had been agreed upon by the council during the meeting of council leaders on Thursday. 

“The decision is also in line with the recommendation made by the City Transportation Council that represents relevant parties, including public transport operators and the administration,” he said.

The transportation council had earlier recommended a cut of Rp 500. 

According to Dani, the council would submit the decree to Jakarta Governor Fauzi Bowo, who is expected to immediately enact the new tariff. 

He said the public transport operators should comply with the new tariff because those operators had been involved in the discussion before the council made its decision.  

Governor Fauzi Bowo said that his administration would announce the cut on Friday. 

The cut, however, is higher than the administration’s proposal of 10,33 percent, or between Rp 200 and Rp 400. The Jakarta chapter of the Organization of Land Transportation Owners (Organda) said earlier that it would go along with the administration’s plan, but would oppose higher cuts, stating that public transport operators are coping with soaring expenses. 

Organda secretary TR Panjaitan said that his organization would reject the new tariff. 

“Should the governor impose the new fare cuts, we will go on strike,” he said. 

Separately, transportation experts from the Indonesian Transportation Society (MTI) called on the administration to draw up a standard formula to calculate all public transportation fares, in order to provide certainty to all parties and avoid unnecessary disputes. 

“There should be a standard mechanism to determine public transportation tariffs, so that the administration and the operators could easily adjust the tariff without getting involved in lengthy debates,” said MTI member Harya Setyaka. 

He urged the government to overhaul the land transportation system in the city for the sake of better services to passengers, saying that the current system of transportation was unmanageable. 

“Among the problems to address are inefficient bus routes, unaccountable ticketing systems and illegal fees”, he said.  

Citing the Transjakarta busway, Harya suggested the administration adapt a similar system for managing all the other regular bus services in the city.
 

Transport industry told to lower fares

Slamet Susanto, The Jakarta Post, Yogyakarta | Thu, 01/15/2009 3:30 PM 

Yogyakarta Governor Sultan Hamengkubuwono X ordered all transport companies to lower their fares as the government has lowered fuel prices. 

"Transport companies should consider the people's psychological condition," he said Wednesday. 

"When the fuel prices were increased, transportation fares immediately increased. 

"But now fuel prices have been lowered, several times, the public expects that transport fares will also be lowered." 

The sultan said it was up to the transport companies to decide how much the fares should be lowered. 

"I do not understand the calculations, they (transport companies) know them better," he said. 

The sultan also admitted that the current reduction of fuel prices was not automatically followed by a reduction in the price of goods, which was one excuse why transport fares have not yet been reduced. 

"There are thousands of excuses not to reduce transport fares, from the prices of tires, to the price of basic necessities, which have not yet been reduced," he said. 

Meanwhile, Chairmain of the Yogyakarta branch of the Organization of Land Transportation Owners (Organda), Johnny Armantya, said his organization would study the possibilities of reducing fares. 

"We will conduct the study in relation to the government's plan to again lower fuel prices," he said. 

Johnny said his organization did not lower transport fares when the government reduced the price of premium gasoline on Dec. 15 because the price of spare parts were still high.

PUBLIC TRANSPORTATION: Fuel price down, bus fares likely stay the same

Agnes Winarti, The Jakarta Post, Jakarta | Tue, 01/13/2009 12:50 PM  

Despite a further expected cut in fuel prices within the next few days, public transportation fares in Jakarta will likely remain unchanged, a meeting of the city's land transportation organization (Organda) concluded Monday. 

Organda's Jakarta secretary, T.R. Panjaitan, said that based on the group's operating cost calculations, the presumed fuel price cut would have little effect on fares. 

"Bear in mind even though fuel prices might go down, the local currency's recent poor performance against the US dollar has raised spare part prices by 20 percent," he said. 

He added there were 11 factors to be considered in the calculation, so a cut in one did not automatically mean an overall decrease in fares. 

"Not to mention the illegal fees charged by corrupt police officers, transportation agency officials and thugs in bus terminals," he added. 

However, he said Organda would respond by improving service quality and passenger comfort, rather than cutting fares. 

"We'll improve service, for instance by requiring all*our drivers to wear*uniforms and to drop passengers off only at the appropriate shelters," he said. 

In response to Organda's refusal to lower the current fares, Jakarta Deputy Governor Prijanto said the issue was still under discussion. 

As for unauthorized fees for corrupt officials and police officers, Prijanto encouraged drivers to refuse to pay such fees. 

At City Hall, Governor Fauzi Bowo said that if the government decided to cut fuel prices again, then public transportation fares must follow suit. 

City councilor Ben Sitompul said a 20 percent reduction in the current fares was reasonable, following a 25 percent drop in the global oil price, from US$150 to US$40. 

M. Tauchid, head of thetransportation agency, said fares could be cut by Rp 200 (2 US cents). 

If the government does cut fuel prices soon, it will be the third time in the last two months. In December last year, the government cut fuel prices, but fares remained unchanged. (hdt)

Indonesia cuts fuel price again to curb inflation

By Muklis Ali, Reuters, Mon Jan 12, 2009 1:10pm GMT  

JAKARTA, Jan 12 (Reuters) - Indonesia's president cut fuel prices for the third time in six weeks in a bid to reduce inflation and combat the impact of the global crisis ahead of elections this year in Southeast Asia's biggest economy. 

"With this decision we expect to see a direct or indirect impact on prices of goods," President Susilo Bambang Yudhoyono told a press conference. 

Finance Minister Sri Mulyani Indrawati said the cut in fuel prices would feed into lower transportation costs, and ease inflationary pressures in January and February. 

"The trend of declining prices is expected to help ease inflation to single digits, approaching 6 percent in the near future," Indrawati said. 

Annual inflation was 11.06 percent in December. The government had forecast annual inflation in the range of 6-7 percent for 2009. 

The reduction in fuel prices follows several other measures, including interest rate cuts and a fiscal stimulus package, aimed at spurring growth which the government earlier this month said could slow to around 5 percent in 2009 from an estimated 6.2 percent in 2008. 

The 10 percent and 6.3 percent reductions in gasoline and diesel fuel announced on Monday will take effect on Jan. 15 and should help ease inflationary pressures, paving the way for the central bank to cut its key interest rate BIPG again. 

Bank Indonesia has cut twice, by a total of 75 basis points, since early December, bringing the key rate down to 8.75 percent. 

The government announced a 72 trillion rupiah ($6.5 billion) fiscal stimulus in early January, with plans to spend heavily on the country's creaking infrastructure in order to create jobs and drive economic growth. 

Indonesia already has some of the lowest fuel prices in Asia, thanks to state subsidies. Since Dec. 1, the government has cut gasoline prices by 25 percent in total and diesel by 18 percent. 

"It may help restore purchasing power. But due to psychological factors, people may not spend their money and may save it instead," said David Sumual, an economist at Bank BCA. 

"To create demand, the focus of the government should be on the fiscal stimulus, including spending and tax cuts, not price cut". ($1=11,075 Rupiah)

(Additional reporting by Dicky Kristanto and Tyagita Silka; Editing by Sara Webb and Toby Chopra)

Pertamina cuts further non-subsidized fuel prices

The Jakarta Post, Jakarta | Thu, 01/01/2009 11:47 AM  

State oil and gas company PT Pertamina has reduced the price of its non-subsidized high-octane fuels as of Thursday for the Greater Jakarta market. 

Pertamina said in a statement that it lowered the prices of its Pertamax, Pertamax Plus and Bio Pertamax to between Rp 5,800 (about 57 U.S. cents) and Rp 6,000 per liter from between Rp 6,500 and Rp 6,800. 

The new prices, however, would only be applied for gas stations certified by Pertamina as "Pas Pasti" (exact and certain). 

"This policy is to give more choices for the people," Pertamian spokesman Rizkani Noor told Antara news agency. 

Pertamax prices for other gas stations in Jakarta, as well as in Banten and West Java are reduced to Rp 5,925 per liter from Rp 6,500, while Pertamax Plus prices are set at Rp 6,400 from Rp 6,800. 

For other parts of Indonesia, Pertamia cuts Pertamax prices to Rp 6,200 per liter for Central Java, East Java and Bali, Rp 6,300 for Sumatra island, Kalimantan and Sulawesi (except Central Sulawesi, where Pertamax price is set at Rp 7,300). 

Pertamax Plus prices are also cut to Rp 6,000 for Batam island, Rp 6,600 for Central Java, East Java, Bali, Aceh, North Sumatra (except Medan: Rp 6,500) and Riau, and to Rp 6,700 for Kalimantan island.  

Last month, coinciding with its anniversary on Dec. 10, Pertamina cut the prices of its Pertamax, Pertamax Plus and Bio Pertamax by Rp 300 per liter to Rp 6,500 a liter, Rp 6,800 per liter and Rp 6,500 per liter, respectively.

Fuel prices could be cut again, says govt

Alfian and Erwida Maulia, The Jakarta Post, Jakarta | Sat, 12/27/2008 10:55 AM  

The government may further cut the prices of Premium gasoline and diesel on Jan. 15, hinting it may even, partly or entirely, float the prices of the two subsidized fuels to keep in line with global crude prices. 

"There might be price revisions for Premium gasoline and diesel on Jan. 15," Energy and Mineral Resources Ministry Purnomo Yusgiantoro said Thursday evening. 

If it happens, it will be the third such price cut since early December -- a popularity-boosting move that could bode well for the government ahead of next year's elections. 

Asked about the size of the possible cut, Purnomo said the government was still evaluating all indicators, in particular fluctuations in the price of crude oil. 

Crude oil traded on the New York Mercantile Exchange Thursday gained about 4 percent to $36.80 a barrel, but analysts said it was only a short-term gain. Bloomberg reported crude oil prices dropped more than 30 percent in December alone. From a record high of US$147.27 on July 11, crude oil prices have fallen by 76 percent. 

Purnomo said the government was fully aware of the downward trend in prices of oil-based fuels, especially Premium gasoline. 

"We usually set the diesel price lower than that of Premium, but an unusual trend is occurring now: The price of Premium in the international market is very low because of an excess of supply," he said. 

"If the trend continues like this, the price of Premium could drop below that of diesel." 

On Dec. 15, the government cut the price of Premium by Rp 500, to Rp 5,000 (45 US cents) per liter, and the price of diesel by Rp 700, to Rp 4,800 per liter. 

Critics have lambasted the government's moves to lower the prices of subsidized fuels as a publicity stunt to draw more support ahead of next year's legislative and presidential elections. 

At a press conference held at the office of the Golkar Party, the country's biggest political party, Vice President and Golkar chairman Jusuf Kalla said the government would "consistently" adjust domestic fuel prices to reflect global levels. 

"The President and I always discuss when we need to cut fuel prices; however, they will certainly keep declining," he said. 

"If oil prices are down globally, then we will also bring them down here to reasonable levels, to reduce the burden on people and boost consumption." 

Purnomo said the price cuts for Premium gasoline and diesel were likely the first such adjustments to reflect global oil prices. 

As the election draws near, the government is managing the issue of subsidized fuels carefully. On Wednesday, Purnomo warned state oil and gas company PT Pertamina, the sole distributor of subsidized fuels, to avoid a shortage of the fuels next year. 

"I don't want to see any shortage of subsidized fuels next year, because this issue can be easily used as a political tool," he said.

Minister called on to help lower fuel surcharges

Medan, N Sumatra,  (ANTARA News) - Tour operators called on the transportation minister to force airlines to lower fuel surcharges which have to be borne by passengers in line with the increase in the fuel oil prices sometime in the past. 

"Now that the fuel oil prices have been cut, we urge the government, in this case the transportation minister, to force airline companies to lower the fuel surcharges," General Chairman of the Association of the Indonesian Travel Agencies (ASITA), Ben Sukma said here on Friday. 

He said that the lowering of the fuel surcharges should be made in order to make it easy for the people to travel by air with fares within their financial reach amid the global economic crisis. 

Ben Sukma said most of airlines at home and overseas had begun imposing unfair policies which tended to disadvantage passengers. 

He said that when the world oil prices increased, airline companies also increased fuel surcharges but when the oil prices were lowered they were reluctant to cut the tax-free surcharges which were borne by passengers. 

Previously, airlines here said that they had not yet lowered the fuel surcharges because the state-owned oil company Pertamina had not yet lowered the price of aircraft fuel (avtur) which was still sold at Rp10,000 per liter. 

Pertamina has said it was looking into the possibility of reviewing the avtur price fortnightly, following domestic airlines` and the transportation ministry`s objections to monthly reviews. 

"We do not object to reviewing the avtur price fortnightly if the airline companies reject monthly reviews," PT Pertamina spokesman Anang Noor Nurphynya said recently. 

Transportation Minister Jusman Syafii Djamal said previously there was a possibility the price of avtur for domestic airline companies would be reviewed on a fortnightly basis. 

Airlines in Medan, North Sumatra, have been imposing different fuel surcharge rates. Garuda Indonesia imposes Rp360,000 per passenger for the Medan-Jakarta route while Sriwijaya Air collects Rp270,000 for the Medan-Jakarta route, Rp230,000 for the Medan-Batam route and Rp190,000 for the Medan-Banda Aceh and the Medan Pekanbaru routes.