A motorist refuels at a Pertamina gas station in Jakarta. (Antara Photo)

Fuel Subsidy Could Explode Beyond Gov’t Ability

BY :THE JAKARTA GLOBE

AUGUST 11, 2022

Jakarta. The government’s spending on fuel subsidies is ballooning due to higher-than-expected global oil prices and disruptions in supply chains, Finance Minister Sri Mulyani Indrawati said on Wednesday.

According to government data, it has spent Rp 116 trillion [$7.9 billion] in energy subsidies during the first seven months of the year.

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They include the cost to provide and distribute 16.8 million kiloliters of subsidized gasoline product called Pertalite, which sells at as low as Rp 7,650 [$0.5] per liter, during the same period.

The targeted Pertalite supplies throughout the year are put at 23 million kiloliters and it could exceed the target given the current rate of consumption.

The government predicted that Pertalite consumption will reach at least 28 million kiloliters by the end of the year.

"Not to mention global oil prices that our budget initially assumed at $100 per barrel but at one point they topped $120 per barrel,” Sri Mulyani said.

Added with a weaker rupiah against the dollar, the energy subsidy will put unbearable loads on the state budget.

Sri Mulyani said the budget for overall energy subsidies to provide affordable fuel products, electricity, and liquefied petroleum gas has been initially set at Rp 502 trillion [$34 billion] for 2022.

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