GOVT MAY RAISE FUEL PRICES ONLY AS LAST OPTION

By Andi Abdussalam

Jakarta, Feb 23 (Antara) - The government will raise fuel oil prices only if it fails to implement other scenarios that could prevent subsidized fuel consumption from exceeding the quota this year.          "The government does not rule out price hikes. But it will do it only as a last option if other scenarios could not be implemented," Deputy Finance Minister Anny Ratnawati said on Thursday.          Besides price hikes, the government has two other options: banning private cars from consuming subsidized fuels and introducing a fuel-to-gas conversion program.          Anny said the government would remain to control prices and discuss with the energy ministry efforts to save on subsidized fuel consumption and to carry out fuel-to-gas conversion program.          "The government hopes that the Energy and Mineral Resources Ministry would continue to control consumption volumes so that the quota would not be exceeded," said Anny.          This year, the amount of subsidized fuels in the state budget was set at 46 million kiloliters with subsidy worth Rp193.8 trillion.          Minister of Energy and Mineral Resources Jero Wacik said last month that the government would restrict the use of subsidized fuels by private cars or raise prices if it failed to control consumption.            "The government is studying how to restrict subsidized fuel consumption by private cars. It is also considering the option of raising fuel oil prices. The government will take one of the two options if we fail to control fuel consumption," Jero Wacik said.          According to Deputy Minister for Energy and Mineral Resources Susilo Siswo Utomo, the government is still considering restricting subsidized fuel consumption by private vehicles.         "It has not yet been decided but the option still remains. If implemented, private vehicles would be banned from consuming subsidized fuels. We have estimated that with this option, we could save on 14 to 15 million kiloliters of fuels," Susilo Siswo Utomo said on Tuesday.          He said that if private cars did not consume subsidized fuels, the government could save on Rp75 trillion. However, this policy is  still under discussion.          Before being implemented, the policy should be agreed first by the finance ministry, the trade ministry, the energy ministry and by all other related parties.          "Until now, no options have been decided yet. A decision must jointly be agreed by related ministries and other relevant parties," Susilo Siswo Utomo said.          He said energy and mineral resources minister's regulation No. 1 / 2013 is the most realistic restriction that could be carried out this year.          The regulation restricts government's vehicles from using subsidized fuels. "This can save 1.3 million kiloliters," he said.          He said that stickers would be attached to government vehicles and the law would be upheld.          Sanctions would be taken against violators. Civil servants who violated the rule would have their vehicles withdrawn.          "We order governors and regional government secretaries to withdraw vehicles from civil servants who violated the law," he said.          In the meantime, Chief Economic Minister Hatta Rajasa said his side had not yet considered raising prices of fuel oils.  "We are not yet considering price hikes, but concentrate on consumption control, efficient use and conversion program," Hatta said.          He said that control consumption program launched by the energy ministry in 2013 could save up to Rp15 trillion.          "I am confident control efforts could save Rp15 trillion," he said.       Hatta assured that the government would focus more on consumption control and gas conversion than on increasing prices in 2013.          However, according to Anny Ratnawati, if all scenarios fail to be implemented while subsidized fuel consumption exceeds quota and affect subsidies, the government will be forced to increase prices as a last option.          After all, fuel consumption now continues to increase in line with the increase in the number of vehicles.          In addition, the Indonesian Crude Price (ICP) in the world market is increasing. The increase in the ICP will also boost the hike of subsidy.          Increase in fuel quota subsidy plus ICP price hike, which  exceeds its previous assumption, will exert pressures on the 2013 state budget.          "The macroeconomic condition at present is showing an upward trend. The value of the rupiah currency against the US dollar has reached Rp9,700, the oil lifting has missed the target and the crude price in the world market has reached over 100 dollars per barrel," Anny said.          The government should also continue to monitor the budget deficit, including trade deficit, where Indonesia's fuel imports were in big amount. The deficit of three percent set at the state budget should continue to be maintained.         "We continue to monitor  changes and their impacts on the budget assumptions. We hope we can maintain at a controllable level. The rupiah exchange rate continues to fluctuate at between Rp9,600 and Rp9,700 per US dollar," she said.          She said that the government continues to monitor fluctuations on all economic indicators which could put pressures on fiscal policies this year. Monitoring is important so that efforts to prevent protracted impact could be made.         "Our concerns are on aspects of quota restriction, the ICP price increase and the oil lifting target," the deputy minister for finance said.         Luckily however, from the aspects of revenues and expenditure, all indicators are still within the controllable level.         "Yet, the government must remain cautious over all possibilities amid the current unfavorable global economic conditions," she said.***3*** (T.A014/f001  ) (T.A014/A/A. Abdussalam/F. Assegaf) 23-02-2013 13:34