Drop in oil price, Indonesia govt hints fuel prices to not be lowered

Last updated on May 7th, 2021 at 09:08 am

The current downward trend is happening in global crude oil prices. But this not following by the Indonesian government which hinted that retail fuel prices for certain types of fuel (JBT), subsidized fuel, and specially designed fuels (JBKP) would not be lowered.

The decision was noted in the Energy and Mineral Resources Ministerial Decree No. 83 K/12/MEM/2020 inked by Minister Arifin Tasrif on April 8, 2020, and has been valid since April 1, 2020.

However, the policy was published in the ministry’s Legal Documentation and Information Network (JDIH) in the third week of April.

“The price of fuel in Indonesia should have dropped between Rp 2,000 – Rp. 3,000 per liter. Then why not go down ?, “Agus Pambagio asked in his written statement in Jakarta

The regulation said that the retail price of kerosene subsidized fuel at the delivery point was set at Rp2,500 per liter including a value-added tax (VAT)

For the price of solar at Rp5,150 per liter including VAT and vehicle fuel tax (PBBKB), while the retail price of Premium fuel at the delivery point is Rp6,450 per liter including VAT and PBBKB.

Previously, the Business Competition Supervisory Commission (KPPU) stated that it would write to the Energy and Mineral Resources Ministry regarding the formulation of the fuel prices following the drop in the price of crude oils at US$37 per barrels.

According to the commission, at present, it recorded that Indonesia’s fuel prices have not been reduced yet, while several Southeast Asian countries have cut their prices significantly.

The KPPU’s Economy Director Zulfirmansyah on Thursday said, his side would ask for clarification from the Energy and Mineral Resources Ministry before conducting a further study.

Economist at the University of Indonesia Faisal Basri said, with the price of crude oil this world, the retail fuel prices is also obtained so that people can enjoy low prices.

However, he hopes, if the government does not reduce fuel prices when oil prices fall, then when the price of oil rises, the government also does not raise fuel prices directly.

Faisal suggested that the government start saving profits from the decline in world oil prices while the current price of fuel. Thus, when world oil prices rise again, the government has a budget to patch it up without having to raise fuel prices.

“The profit enjoyed by the gas station is taken by the government, used as savings so that later when oil prices rise, the government will not increase it too. So use the savings,” he noted.

Meanwhile, Public Policy Observer Agus Pambagio also stated the same thing.

“The price of fuel in Indonesia should have dropped between Rp 2,000 – Rp. 3,000 per liter. Then why not go down ?, “Agus Pambagio asked in his written statement in Jakarta on Monday, April 27.

Agus then elaborated on the basic side of the current fuel price formula policy.

According to him, fuel prices in Indonesia have not been able to go down even though the price of world crude oil dropped significantly, because the flexibility of prices to go up and down in 2 months was lost due to the removal of the upper and lower limit prices. Also the margin and cost per liter are set higher.