Fuel prices up for private cars only: Minister

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Wed, 05/21/2008 10:43 AM  |  Headlines

Energy and Mineral Resources Minister Purnomo Yusgiantoro suggested Monday that fuel price increases would only apply to privately owned cars and not motorcycle or public transportation.

The increase in fuel prices will be "between the subsidized price and the market price", Purnomo said without providing details.

He said fuel prices for private cars would fall into a pricing category he called the "half-subsidized price". Other pricing categories, he said, are "subsidized price and market price".

Premium gasoline and diesel fuel are currently being sold at subsidized prices of Rp 4,500 (about 48 U.S cent) and Rp 4,300 a litter, respectively at the country's gasoline stations. However, the Premium gasoline and diesel fuel are sold at market prices of Rp 8,300 and Rp 10,107 a litter to industrial buyers.

Late last month, the government said it was exploring the possibility of raising fuel prices by an average of 28.7 percent in response to skyrocketing global oil prices. Under a proposed plan by the economic minister, the price of Premium fuel would be raised to Rp 6,000 a liter and diesel to Rp 5,500 a liter.

"For private cars, even though they don't deserve to receive a subsidy anymore, we will raise the price gradually until it reaches the market price," Purnomo said

Motorcycle owners and public transportation operators, he said, will continue to enjoy full subsidies, but will have their fuel consumption limited starting in September.

The government is scheduled to make an announcement as soon as Wednesday about the timing and the size of the fuel price increases.

To implement the price increases and consumption limits, Purnomo said the government would distribute control cards to all fuel users under its Smart Card program. There will be three types of cards, which will follow the three fuel pricing categories.

The Smart Card program is aimed at keeping fuel consumption under the national fuel quota of 27.8 million kiloliters for gasoline and diesel this year, and also to ease the pressure of skyrocketing crude oil prices on state spending.

Under the newly revised 2008 state budget, the government has allocated fuel subsidy spending of Rp 126.8 trillion, or about 12 percent of the government's total expenditures.

For the initial phase of the Smart Card implementation, Purnomo said the government would focus on areas around Java and Bali, which account for about 70 percent of national fuel consumption.

Several cities in Java, including Jakarta, are already facing limits on fuel consumption imposed by state-owned oil and gas company Pertamina since Friday.

In a bid to curb panic buying in the wake of the government's plan to raise fuel prices, Pertamina has limited gasoline purchases in these cities to Rp 75,000 for private cars, Rp 100,000 for public transportation vehicles and Rp 15,000 for motorcycles.

As of Monday, most gas stations in Jakarta had yet to implement these limits as they await further information from Pertamina.

Panic buying of fuel around the country has pushed fuel consumption up by an average of 15 percent over the last two weeks, Pertamina reported.

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