Senior Indonesian minister Luhut Pandjaitan said prices of 90-octane gasoline and subsidised liquefied petroleum gas (LPG) in 3-kg canisters may be increased to reflect higher global energy prices, news sites Detik and Kompas reported.
The reports come as state energy firm Pertamina lifted price of 92-octane gasoline Pertamax by 39 percent to around 12,500 rupiah ($0.8702) per litre, after a jump in crude oil prices due to the war in Ukraine.
Luhut said after the increase in Pertamax, the price of Pertamina’s 90-octane gasoline known as Pertalite could be raised, followed by LPG, the reports said.
“We will do this gradually. The 3-kg gas price hasn’t been increased since 2007. I think that isn’t fair,” he added.
Luhut was cited as saying the government might look at July through to September for the increase in prices of the fuels. A spokesperson for Luhut confirmed that the minister had made the comments. When asked about how much prices might increase, he said it would depend on further developments.
Indonesia’s March inflation rate hit a two-year high, data showed on Friday, as economists warned prices would creep up further due to higher gasoline prices and value-added tax.
An energy think-tank executive said lifting prices was a rational decision, but it should be after Islamic holidays at the end of the upcoming fasting month given the hike in Pertamax.
“It is better (to increase) after Eid al-Fitr so consumers have some breathing room,” said Komaidi Notonegoro of the ReforMiner Institute.
Inflation in Indonesia, which has the world’s biggest Muslim population, typically spikes during Ramadan.
Pertamina left Pertalite’s price unchanged at 7,650 rupiah per litre, but said price adjustments for Pertamax were “unavoidable” after the Indonesia Crude Price rose to $114.55 per barrel as of March 24, up from $73.36 in December.
Pertalite is designated as a “special assignment” fuel, which means the government pays Pertamina compensation for these fuels if it incurs losses when global oil prices rise.
Indonesia scrapped gasoline subsidies in 2015, but authorities have continued to regulate retail prices for Pertalite and 88-octane gasoline.
Pertamina said subsidised fuel, including Pertalite, made up around 83 percent of its sales.
For more information visit pertamina.com
