Indonesia asks Pertamina to limit subsidised fuel sales

An worker at a Whole gasoline station fills up a bike in south Jakarta February 12, 2015. Image taken February 12, 2015. REUTERS/Darren Whiteside/File Picture

JAKARTA, Aug 11 (Reuters) – Indonesia’s authorities has requested state power agency Pertamina (PERTM.UL) to restrict its gross sales of subsidised fuels in order to not improve strain on power subsidies, Finance Minister Sri Mulyani Indrawati stated on Thursday.

Indonesia has jacked up its power subsidies this 12 months to 502 trillion rupiah ($34 billion), aiming to maintain costs of some fuels and energy tariffs unchanged amid rising world power costs and the rupiah’s depreciation.

This has helped maintain inflation in Southeast Asia’s largest financial system comparatively low, at 4.94% final month. The central financial institution has additionally stated this offered it with room to delay price hikes.

The subsidy price range assumes gross sales of subsidised diesel for all the 12 months will attain 15.1 kilolitres, and gross sales of subsidised gasoline at 23.1 kilolitres, however present gross sales quantity has already reached round these ranges, stated Isa Rachmatarwata, budgeting director basic on the finance ministry.

“That is why I’ve requested Pertamina to manage (gross sales quantity) in order that the state price range won’t face further strain,” Sri Mulyani stated in a information convention.

Pertamina plans to restrict subsidised gasoline gross sales by making shoppers register their autos digitally so the corporate can determine whether or not subsidies have reached supposed recipients, its buying and selling unit Pertamina Patra Niaga’s Company Secretary Irto Ginting advised Reuters.

Nonetheless, Pertamina continues to be ready for presidency guidelines on gasoline gross sales and distribution, Ginting added.

Economists have criticised the federal government’s determination to upsize subsidies this 12 months, saying this may take cash away from tasks with greater financial impacts.

Mentioned Abdullah, head of parliament’s budgetary committee, stated the federal government and parliament are set to debate the effectiveness of subsidies.

“If we proceed to depend on the state price range with out bettering the mechanism of subsidies, many precedence agendas for nationwide growth won’t be achieved,” he stated.

($1 = 14,765.0000 rupiah)

Reporting by Gayatri Suroyo and Stefanno Sulaiman; Modifying by Jan Harvey and David Holmes

Our Requirements: The Thomson Reuters Belief Ideas.