Observers Say Fuel Prices In Indonesia Are Among The Cheapest In The World

Illustration: An officer passes behind a fuel price signboard at a public gas station (SPBU) in the Kuningan area, Jakarta. (ANTARA/Ismar Patrizki)

JAKARTA - Research Director of the Center of Reform on Economics (CORE) Indonesia, Piter Abdullah, stated that the increase in the price of Pertamax fuel oil (BBM) is unavoidable and is still among the cheapest in the world.

According to him, the increase in Pertamax prices cannot be avoided because world oil and gas prices have indeed soared due to the Russo-Ukrainian war. "However, even if it goes up, the price of Pertamax is actually the cheapest in the world," he said in Jakarta, Sunday as quoted by Antara.

In addition, he continued, the public must also understand that the price increase is only applied to non-subsidized fuel and Pertamax is actually intended for the upper-middle class.

"Even then, Pertamax's sales volume is also small, only 14 percent of Pertamina's total fuel sales. Meanwhile subsidized fuel and LPG, including Pertalite, Biosolar, and melon gas, which incidentally are aimed at the lower middle class, have not increased prices so far," said Piter in his statement.

In fact, according to him, the new Pertamax price of IDR 12,500/liter is still far below the economic price of IDR 16,000/liter, so Pertamina is still subsidizing IDR 3,500 per liter.

"With all these conditions, it can be understood that the policy to increase the price of Pertamax is right. So, I think it's just a matter of how the government can communicate well regarding the current conditions. That's the challenge," said Piter.

Citing data from Global Petro Prices, Piter said that in the Southeast Asian region, for example, Pertamax, which is sold for IDR 12,500/liter, is much cheaper than similar fuels in Singapore (IDR 30,208/liter), Laos (IDR 24,767/liter), and the Philippines (IDR 20.828/liter), Cambodia (IDR 20,521/liter), Thailand (IDR 19,767/liter), and Vietnam (IDR 16,500/liter).

The only Southeast Asian country that is cheaper is Malaysia, which is IDR 6,965/liter.

"But it must be remembered that in Malaysia, fuel equivalent to Pertamax does receive subsidies, so the price is lower. Meanwhile, in Indonesia, subsidies are given to Pertalite," he said.

Meanwhile, at the global level, fuel prices are also far above Pertamina. Hong Kong, for example, sells at IDR 41,346/liter and the Netherlands at IDR 36,148/liter. In fact, fuel oil in Africa is much more expensive, for example in Zimbabwe it is sold at IDR 33,795/liter.

Domestically, according to him, the price of Pertamax is cheaper than private gas stations that sell fuel with RON 92 at a price of IDR 12,900 to IDR 16,000 per liter.

Likewise with the price of LPG. Pertamina's Brightgas output, which is sold for IDR 15,725/kg, is also much lower than other countries, such as Vietnam (IDR 26,927/kg), the Philippines (IDR 26,989/kg), and Singapore (IDR 29,927/kg). Only Malaysia is lower at IDR 6,466/kg.

"But the 12 kg Petronas Gas is a subsidy product from the Malaysian government, so it can be sold cheaper," he said.

Therefore, Piter asked the students to be wise in responding to the increase in Pertamax fuel prices.