Investment Minister Asks People To Prepare For The Rising Fuel Prices, This Is What Pertamina Has To Say

JAKARTA - Investment Minister/Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia asked the public to be prepared if the government decides to increase the price of subsidized fuel oil (BBM).

According to him, the impact of the government continuing to hold back the increase in fuel prices will certainly have an impact on the state's fiscal condition which is not healthy because a quarter of state revenue must be used for fuel subsidies.

Responding to this, Pertamina Patra Niaga Corporate Secretary Irto Ginting revealed that the authority to determine the price of subsidized fuel is in the hands of the government so that his party as the executor will be subject to the government's decision.

"The price of subsidized fuel and subsidized LPG is the government's authority," Irto told VOI, Monday, August 15.

The same thing was conveyed by the Upstream Oil and Gas Regulatory Agency (BPH Migas) which stated that it would follow the government's direction if it later raised subsidized fuel prices.

"If it is a government policy, we are ready to supervise the distribution of subsidized fuel so that it is right on target," he said.

Previously, Bahlil asked the public to be prepared if the government would increase the price of subsidized fuel. Bahlil said that the current uncertain global economic conditions caused world oil prices to continue to skyrocket.

He noted that the average world oil price reached 105 US dollars per barrel from January-July 2022. In fact, the assumption of oil prices in the state budget is only in the range of 63-70 US dollars per barrel.

"Today, if the (oil price) is 100 US dollars per barrel, our subsidy could reach IDR 500 trillion. But if the oil price per barrel is above 100 US dollars, for example 105 US dollars, assuming the dollar exchange rate is IDR 14.500 to the average the current average is IDR 14.750, and our quota is from 23 million kilo liters to 29 million KL, so there must be additional subsidies," he explained.

With all these figures, Bahlil said there should be at least IDR 500 trillion to IDR 600 trillion in subsidy allocations from the State Budget (APBN) for fuel subsidies. Therefore, according to Bahlil, there needs to be public understanding of the current conditions.

He said this could be a shared momentum to work together to keep the country's fiscal condition healthy.