Tuesday, 17th October 2017

President: Oil fuel subsidy to be controlled

16th August 2012 | 1.342 Views
Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono said stringent mechanism would be adopted on oil fuel subsidy in 2013, stopping short of announcing the sensitive issue of oil fuel price hike.

Oil fuel subsidy would be controlled with improved mechanism in distribution , more efficient, effective and correct in target, Yudhoyono said when proposing the government draft state budget (RAPBN) for 2013 at a plenary session of the House of Representatives here on Thursday night.

"Subsidy on oil fuel has to be controlled. We will continue efforts to improve the mechanism for the distribution of subsidized oil fuels to be more efficient," he said.

He said the volume of subsidized oil fuels would be controlled through optimization of the program of conversion of kerosene into liquefied petroleum gas (LPG) in 3-kilogram canisters and growing use of alternative energy such as bio-fuels, and gas fuel, as well as restriction on the use of subsidized oil fuels by phases.

Earlier deputy energy and mineral resources minister Rudi Rubiandini indicated possible increase in the prices of subsidized oil fuels in 2013 to curb swelling energy subsidies.

Rudi said the prices of subsidized oil fuels would be raised by Rp1,500 per liter as was planned but failed in 2012.

The government has set aside subsidies on oil fuels, 3-kg LPG and LGV in the proposed RAPBN for 2013 at Rp193.8 trillion.

Altogether, subsidy fund allocated in the RAPBN totaled Rp316.1 trillion or an increase of 18 percent or Rp48 trillion from Rp268.1 trillion in the revised state budget of 2012.

The subsidy budget include Rp80.9 trillion for electricity and Rp41.4 trillion in non energy subsidies beside the subsidy on oil fuels.

Non energy subsidies include Rp17.2 trillion in food subsidy, Rp15.9 trillion in fertilizer subsidy, Rp137.9 billion in seed subsidy , Rp2 trillion in public serviced obligations , Rp1.2 trillion in program credit interest subsidy and Rp4.5 trillion in tax subsidy.

The subsidy spending of Rp316.1 trillion is part of Rp591.6 trillion expenditures allocated for non ministerial agencies and 2013 RAPBN institutions.

The budget for non ministerial agencies and other institutions constitute payments of interest on debts totaling Rp113.2 trillion and other totaling Rp162.3 trillion.

The government sets income target as proposed in the RAPBN at Rp1,507.7 trillion as against expenditures of Rp1,657.9 trillion or a deficit of Rp150.2 trillion or 1.6 percent of the country`s GDP.

The deficit is lower than a deficit of 2.23 percent of the GDP in the revised state budget of 2012.

The RAPBN is calculated on assumptions that the economy would grow 6.8 percent, inflation is 4.9 percent , interest rate on 3-month state treasury notes is 5 percent, oil price is US$100 per barrel and oil lifting is 900,000 barrels per day and gas lifting is equivalent to 1.36 million barrels of oil per day (*)