Indonesia proposes increase in fuel subsidies

Indonesia’s Energy and Mines Ministry has proposed a fuel subsidy increase of 51% in the country’s 2009 state budget, from the earlier planned Rp25.21 trillion (US$2.11 billion) to Rp38 trillion (US$3.18 billion). According to Ministry Oil and Gas Director General Evita Legowo, subsidies would increase once Indonesia moves to a new payment system for distributing subsidized fuel. However, the Energy and Mines Ministry is proposing that the premium be fixed to the Indonesia Crude Price (ICP), instead of being a percentage of international prices. The Indonesian government is also planning to pay a subsidy amounting to Rp831.43 billion (US$69.64 million) to biofuel producers in 2009. (January 30/ February 10/11, 2009)