Indonesia: Higher oil prices to boost state revenue, increase subsidies

  • The increase of the global crude oil price has changed Indonesia’s outlook for revenue and subsidies, estimated to grow 50% to IDR240tr and IDR148tr, respectively by end-2018.
  • The government set its Indonesian Crude Price (ICP) for Aug 18 at USD69.36 per barrel, while the global oil price reached USD78 per barrel for Brent crude on 17 Sep 18.
  • Energy and Mineral Resources Minister Ignasius Jonan said he expected to reap IDR200tr from the oil and gas sector and IDR40.6tr from the mineral and coal sector.
  • But Jonan explained the subsidy for Solar-branded diesel fuel was also expected to reach IDR29tr, or more than 300% higher than the figure in the 2018 state budget of IDR7tr. Meanwhile, the subsidy for kerosene will increase by 63% to IDR3.6tr.
  • Jonan further said positive coal exports could also ease the oil and gas trade deficit, which in Aug 18 reached USD1.6bn, or 36% higher than the figure in Jul 18 of USD1.2bn.
  • Previously, the ministry opened a chance for coal exporters to add 100 million tons in 2018 in an effort to boost exports.
  • “With the assumption of the coal price at USD60 per ton and if we add 100 million tons, we could get USD6bn. That will cover our low oil and gas trade deficit,” he said.

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