An OPEC country is a net importer of oil? Is the writing on the wall?
Jakarta ministers rethink fuel price pledge
By Shawn Donnan in Jakarta
Published: July 11 2005 03:00 | Last updated: July 11 2005 03:00
Indonesia's government is reconsidering a pledge made earlier this year not to raise fuel prices again, as soaring global crude oil prices put mounting pressure on the country's budget.
The government of President Susilo Bambang Yudhoyono promised not to move again on prices after raising them an average 29 per cent on March 1 in an attempt to control a ballooning subsidy bill.
Most analysts say any additional move will be politically difficult. Like many of its neighbours, Indonesia has a long-standing culture of subsidising fuel prices.
A government adviser said last week: "Initially [the president] turned down this idea to reduce the fuel subsidy. But ...I get the impression he is starting to realise there is no other way to solve the problem."
Indonesia, Opec's only Asian member, has suffered declining production at home at the same time as rising domestic consumption, so the country has become a net importer of crude oil. Any price-related windfall from its crude oil exports has been more than offset by the rising cost of imports and subsidies.
At current prices, economists say Indonesia's subsidy bill will top Rp100,000bn (£5.7bn) in 2005, or almost 5 per cent of the country's forecast gross domestic product for this year.
Indonesian officials last week refused to release what has become increasingly sensitive monthly crude oil import data to the Financial Times. But in the first six months of this year crude oil production averaged just 938,883 barrels per day, against 1.1m b/pd last year, according to official data.
Jusuf Anwar, finance minister, said in May that Indonesia had earned $1.4bn less from crude and petroleum product exports than it spent on imports in the first quarter of 2005. The move to reconsider a fuel price rise has come amid a supply crisis caused by surging consumption. Strong growth in car and motorcycle sales has coincided with cashflow problems at Pertamina, the state oil company, related to delayed government subsidy payments.
Additional reporting by Taufan Hidayat |
