Worried That Fuel Imports Could Reach 20 Billion US Dollars, Economist Faisal Basri Suggests The Government To Cut Subsidies Immediately

JAKARTA - Senior Economist, Faisal Basri advised the government to again cut subsidies for fuel oil (BBM). Moreover, energy subsidies have swelled from Rp. 152.2 trillion to Rp. 502.4 trillion.

"Jokowi already has previous experience when he was just inaugurated in 2014, he immediately cut subsidies from Rp. 350 trillion to Rp. 250 trillion and the funds were used to build infrastructure. That is what must be done now," Faisal said in Energy Corner, Monday, June 27.

He added that this step must be taken immediately because from January to May 2022 the government has poured 9.7 billion US dollars to import fuel from abroad. He is worried that by the end of the year, fuel imports will reach 20 billion US dollars.

"Prices go up, demand goes up, volumes also go up because the government doesn't respond to the increase in world oil prices by continuing to provide unlimited subsidies. Inevitably there will be switching from Pertamax users to Pertalite so that Pertalite subsidies swell to reach hundreds of trillions. Not to mention LPG and diesel," continued Faisal.

Meanwhile, the Indonesian Governor for OPEC, Widhyawan Prawiraatmadja, said that the price of diesel fuel compared to the current price of crude oil is above US$25 per barrel. "This means that if the price of crude oil penetrates USD 110 per barrel, the price of diesel oil in the international market can penetrate USD 150 per barrel.

He also compares the price of fuel in Indonesia with the price of fuel in other countries such as the United States. "For example, in America the price of fuel per gallon has penetrated above US$5 per barrel. This means that if you calculate the average per liter, which is around US$1.5 or Rp. 20,000. Let us compare it with Shell, which has reached Rp. 19,000. per liter and that is the real price," he said.

Previously, during the PDI-P National Working Meeting, President Joko WIdodo revealed that energy subsidies had swollen from Rp.

"It can be used to build capital city one because the figure is already IDR 502 trillion. This is all we have to understand, how long can we survive with subsidies of this size. If we don't understand the numbers, we can't feel how serious the problem is today," Jokowi said