Selasa, 12 Maret 2013

GOVT POSTPONES GAS PRICE HIKE TO OFFSET INFLATION

 By Andi Abdussalam
          Jakarta, March 12 (Antara) - The government's decision to postpone state-owned oil and gas firm Pertamina's plan to increase gas price in 12-kg cylinders this month can help offset inflation that has been high since early this year.
         "The postponement of raising the price of liquefied petroleum gas (LPG) in 12-kg cylinders is good. We believe it would curb the inflation rate in March and April," Bambang Brodjonegoro, acting head of the Finance Ministry's fiscal policy affairs, said.
         University of Indonesia's economist Lana Soelistianingsih shared Bambang's view, saying that the government decision to postpone the LPG price increase would cut inflation potential by 0.5 percent.
         "If the government goes on with  Pertamina's planned gas price hike, it would contribute multiple inflationary pressures to the economy because prices of food commodities such as onions, garlic, chili and other horticultural products have been skyrocketing. The deferment of the gas price hike will reduce the increasing inflation in the past two months," Lana Soelistianingsih.


         Bambang is confident that the postponement of gas price increase will help stabilize essential commodity prices because it would be followed by a harvest time. It would help lower the inflation rate in March and April.
         "With the gas price hike postponement, the inflation rate in the March and April period would be lowered," Bambang added.
         Head of the Central Bureau of Statistics (BPS) Suryamin said the year-on-year (yoy) inflation rate had now reached 5.31 percent, over the assumption set in the 2013 state budget at 4.9 percent.
         BPS recorded that the inflation rate in February stood 0.75 percent, which was the highest level in the same month over the past ten years.  The January inflation was 1.03 percent so that the inflation rate on the calendar basis was 1.79 percent.
         According to Lana Soelistianingsih, the government has intentionally postponed increase in 12-kg cylinder gas prices so that it would not happen in the same year as the increase of the gas price in 50-kg cylinders.
        "The increase in the price of gas in 50-kg cylinders has significant effect because its consumers are small and medium scale food industry such as bread industry. Its products are included in the consumer price index (IHK)," she said.
         Therefore, she said, inflationary pressures have begun since early this year.
         "In the first two month, the inflation rate has reached 3.6 percent of the 4.9 percent as set the stage budget in 2013," she added.
         However, she predicted that the inflation rate at the end of 2013 would be between 5 to 5.5 percent, but with the condition that the government did not raise fuel oil prices.
         Earlier, Director of Price Statistics of the BPS Sasmito Hadi Wibowo said LPG in 12-kg canisters was one of the main basic needs of the people. If its price is raised, it would have a big impact on the inflation rate in the country.
        Therefore, the government has decided to reject and postpone state-owned oil and gas company Pertamina's proposal to raise the price of LPG in 12-kg cylinders this month.
         Pertamina has proposed a 36.2 percent rise in the price of LPG in 12-kg cylinders effective in March 2013 to the government.   If approved, the price of LPG in 12-kg cylinders will increase by Rp2,116.7 to Rp7,966.7 from Rp5,850 a kg previously.
         As such, the price of LPG in 12-kg cylinder from agents to consumers will increase by Rp25,400 to Rp95,600 from Rp70,200 earlier. The price hike is expected to reduce the company's losses from the sale of LPG in 12-kg cylinders by Rp1.1 trillion to Rp3.9 trillion.
         Pertamina last raised the price of LPG in 12-kg cylinders by Rp100 to Rp5,850 from Rp5,750 a kg in October 2009.
         Chief Economic Minister Hatta Rajasa said the government had considered the purchasing power of the people in deciding to postpone the increase in the 12-kg LPG cylinder. This is because the government will also raise the electricity tariff price in 2014.
         He said now is not the right time to raise the price of LPG in 12-kg cylinders.
          According to the coordinating minister for economic affairs, Pertamina has the authority to raise the price of non-subsidized LPG in 12-kg cylinders. However, the government must give its views to the plan, he said.
         Meanwhile, State-owned Enterprises  Minister Dahlan Iskan said he accepted the government decision to reject the proposal by Pertamina to raise the price of gas in 12-kg gas cylinders.
         "The present economic condition requires Pertamina to propose a price hike but it is up to the government to decide. What is important is that Pertamina has submitted a price hike proposal," the minister said on Monday.
         Dahlan said that Pertamina had proposed to increase the price of non-subsidized liquefied petroleum gas (LPG) in  12-kg cylinders in an effort to reduce business losses. The business loss in the LPG sales is predicted to reach Rp5 trillion in 2013.
        "There is no problem if the proposal is not accepted. The important thing is that we have proposed it. So, the State Audit Board (BPK) will not blame us if the company suffers a loss," Minister Dahlan said.
         Public policy observer Agus Pambagio said meanwhile that Energy and Mineral Resources Minister Jero Wacik should be consistent in implementing his ministry's Regulation No. 26/2009. Based on the regulation, the LPG price shall be decided by the corporation by considering the people's purchasing power and the continuation of its distribution.
        "With the regulation, it is just right for Pertamina to increase gas prices in 12-kg canisters," Agus Pambagio said.
         His opinion was supported by legislator Achmad Rilyadi of the House Commission VII on energy affairs that Pertamina must observe the law which suggests that a state-owned firm should not suffer from losses. "The government should develop Pertamina by helping cut its losses in the downstream business, while encouraging its role in the upstream area," he said.
        Agus added that the government should not interfere in Pertamina's plan in raising gas prices. "The government must approve Pertamina's plan to increase non-subsidized gas price in 12-kg canisters," he stressed.
         He said that if the government allowed Pertamina to suffer a loss of Rp5 trillion in 2013, the State Audit Board (BPK) would question it. "If the government is willing to bear responsibility, it is okay. The Pertamina management should not be disturbed," Agus Pambagio added.
         Finance Minister Agus Martowardojo said on Monday his ministry is still studying the impact of the decision to postpone raising the  gas price.
         "The plan is still being discussed  by the government," Agus said.
          The minister gave no details about the effect of the delay  but the decision would certainly result in an increase in losses to be suffered by Pertamina, which sells  LPG below its production cost.***3***

(T.A014/f001    )

(T.A014/A/A. Abdussalam/F. Assegaf) 12-03-2013 14:0

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