(MENAFNEditorial)
SINGAPORE April 13 2015—Rebounding crude prices and a weakening rupiah are testing Indonesia’s decision to remove gasoline subsidies. State oil company PT Pertamina is picking up some of the tab for now and is signaling it wants that to change.
“Pertamina is taking a loss for the moment” said Ahmad Bambang the company’s Jakarta-based marketing and trading director explaining that the current retail price of IDR7300 (US$0.56) a liter is IDR600 less than the break-even price for Pertamina. “The government had promised us that in the end there will be no loss” he said without elaborating.
In a move that investors welcomed as a key policy change for Southeast Asia’s largest economy President Joko “Jokowi” Widodo scrapped gasoline subsidies and capped assistance for diesel from January 1 saying the government would regularly set a retail price that would fluctuate in line with international prices. The move was made easier for the leader who took office in October as it coincided with the lowest Brent crude price in almost six years.
That allowed Jokowi to cut the retail gasoline price to IDR7600 a liter in January from IDR8500. Following Brent crude’s drop to US$45.19 a barrel on January 13 the lowest intraday level since March 2009 Indonesia’s government cut the domestic price to IDR6600 on February 1. Since then authorities have raised the local price twice most recently to IDR7300 a liter on March 28. Read more..
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