Oil Up 1 Dollar, Subsidy Increases Rp 2.6 T

The Government believes is ready to anticipate the potential increase in crude oil prices. In addition to the exchange rate, volatility of food and energy are also factors that have been taken into account the government in an effort to ensure inflation is maintained.

The government is also optimistic that it will not impact on expectations of economic growth in 2011. Minister Hatta Rajasa suggests that when met after a limited cabinet meeting at the Presidential Office of Economic Affairs, Jakarta, Monday (12/27/2010).

"We can not assume that the price of crude oil in 2011 will stay at 90 or 100 dollars per barrel for crude oil prices are very volatile. But we also certainly have a policy response if the price is on top of that," said Hatta.

Nevertheless, he asserted, the policy response if oil prices continue rising trend is not necessarily in the form of rising fuel prices in the country. According to Hatta, there is no government thinking in that direction. "We look at what kind of food prices, energy prices, too. There is a simulation, what its policy response," he said.

Anticipating the potential for higher oil prices, Hatta said the government prepares measures of supply and demand sides.

From the supply side, the government is fully committed to encouraging increased oil production. While on the demand side management conducted among others by limiting the use of subsidized fuel. "Supply we increase, the demand was not there so we manage waste. Do not if there is an increase was always talking like a panic, whether the increased auto fuel, baseball, we can manage it, "he said.

The government remains optimistic that oil and gas production target set at Budget 2011 970.000 barrels per day will be achieved. "We've had oil price of 140 dollars per barrel, but we still survive, even grow," he said.

Meanwhile, the state oil and gas trade balance in 2011 quite alarming. "Overall, the investment climate and our imports in 2010 remarkable because all of the above target. Growth is quite nice, balance of trade (trade balance) is also still good, positive, though, we are also concerned about the balance of trade in oil and gas sector. Because increasing consumption, imports increased, "said Hatta Rajasa.

Risk of increased imports

According to Hatta, to mitigate the risk of increased imports of oil products, the government sure will do two step policy.

First, increase the production of oil products in the country. This can be done with the addition of two projects in Indonesia. "Second, set the subsidized fuel consumption and make savings," he said.

Earlier, Finance Minister Agustin Martowardojo remind potential increase in world oil prices because any increase in Indonesia's crude oil price (ICP) of 1 U.S. dollar will lead to soaring fuel subsidy needs Rp 2.6 trillion.

If a weaker exchange rate of Rp 100 per U.S. dollar, will encourage an increase in fuel subsidies to Rp 2.4 trillion.

Executive Director of the Institute Priagung Reforminer Rahmanto mentioned, the increase in crude oil prices in international market by itself will increase the budget deficit because it would increase the budget of energy subsidies (both fuel and electricity subsidies.)

Reforminer calculations showed that every one dollar increase in crude oil prices above assumption of Indonesian crude oil price (ICP) 80 dollars per barrel would boost energy subsidy budget of Rp 3.1 trillion.

"While the revenue from oil sales only increased by Rp 2.6 trillion. If policy restrictions on subsidized fuel to be implemented, also will not help. There would be burdensome to the community because the price could pertamax Rp 8,900 per liter. The government should raise fuel USD 200-USD 300 per liter, "he said. (DAY / Oin)

Source : Kompas