Subsidy Allocation Increase, Coal Price Adjusted

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    The government has allocated additional subsidy for solar diesel fuel; from the current allocation of Rp500 to Rp1000/liter. At the same time, the government also adjusted the coal price in domestic market to USD70/tonne.

    Formerly, the government determined no increase for oil fuel (premium and subsidized diesel fuel) and the electricity tariff until 2019.

    Minister of Finance Sri Mulyani Indrawati said in Jakarta, Tuesday (6/3), that the additional subsidy for diesel fuel and adjustment of coal price in the domestic market aimed to maintain the healthy balance sheet of PT Pertamina (Persero) and PT Perusahaan Listrik Negara (Persero), fiscal health, and community purchasing power.

    According to Sri Mulyani, the increase of oil that higher than the assumption of the State Budget 2018 elevates the state receipt potential from tax and non-tax sector. However, the current subsidy for diesel fuel of Rp500/liter is not reflected the real condition.

    Hence, Ministry of Energy and Mineral Resources along with Ministry of State-Owned Enterprises reviewed the subsidy and electricity tariff as well as the balance sheet of Pertamina and PLN. As a result, the additional subsidy for diesel fuel is increased to Rp1000 per liter.

    In association with electricity, domestic market obligation (DMO) for coal would be USD70 per tonne, while the subsidy for 450 VA customer increase would also be added. In March 2018, reference price for coal price would be USD101.86 per tonne.

    Sri Mulyani said diesel fuel subsidy and electricity tariff for electricity tariff would be included in State Budget 2018. As the compensation, the government would receive state revenue from oil and gas commodity. On other hands, there is an implication of a decrease in tax revenues from DMO coal pricing by 70 US dollars per tonne.

    “Thus, the budget would be stable and appropriate to State Budget law 2018. We would keep the deficit around 2.19 percent of the gross domestic product,” said Sri Mulyani.

    Sri Mulyani emphasized the government would continue to monitoring the impact of world oil price surge to maintain the credibility and the sutainabilty of State Budget 2018.

    Provide Benefits

    Separately, Minsiter of EMR Ignasius Jonan commented that the government ensured that coal price for domestic market would benefit many parties both for PLN and ohter national coal mining companies.

    “The decision would maintain the current electricity tariff and avoid PLN losses. We only have to wait for President Joko Widodo to sign the presidential and ministerial regulations,” said Jonan.

    The Vice Chairman of VII Commission of House of Representatives from Golkar Party Satya Widya Yudha said they support the decision not to increase the electricity tariff and oil fuel. He said the increase would be a burden for the community and soaring inflation.

    “We support the government step (not increase electricity tariff and oil fuel) as it shows the govt is pro-people,” said Satya. (Dds/Pas)

    Source : Kompas

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