Indonesia: Govt plans 500% diesel subsidy hike for 2019

  • Thegovernment plans to increase the subsidy for Solar-branded diesel fuel to IDR2,500 per litre in 2019, from the current subsidy of IDR500 per litre. Solar costs IDR5,150 per litre at the current subsidized rate
  • Finance Minister Sri Mulyani Indrawati said on 18 Jul 18 that the increased subsidy was possible upon projections that the global price for crude oil would not increase significantly in 2019
  • The government’s projection for the 2019 global crude price is USD70 per barrel. The current global crude price is USD71.71 per barrel on 18 Jul 18.
  • In Jun 18, the government announced that it would increase the subsidy for Solar for 2018 from IDR1,500 to IDR2,000 per litre, but the plan has yet to be implemented. Sri Mulyani said the government would soon announce the 2018 subsidy increase of IDR2,000 per litre.
  • “For 2019, the diesel fuel subsidy will be between IDR2,000 to IDR2,500 per litre, depending on the global oil price,” she said after a Cabinet meeting at Bogor Palace in West Java.
  • According to the Energy and Mineral Resources Ministry, subsidized diesel composed 30% of the country’s fuel consumption. 2018’s total fuel consumption is estimated at 75 million kiloliter, or 471.75 million barrels.

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