Indonesia Considers Raising Gasoline Prices as Oil Spikes
Indonesia Considers Raising Gasoline Prices as Oil Spikes
(Bloomberg) -- Indonesia will consider raising gasoline prices after global oil costs surged, with the government still deciding on the magnitude and timing.
“Because if we don’t raise prices, then Pertamina might collapse, while raising prices would affect the people, so we are calculating this,” Coordinating Minister for Investment and Maritime Affairs Luhut Panjaitan told reporters at a briefing in Bali. “We are sure to raise it,” he said, adding that the government has a few scenarios in mind, without giving specifics.
Oil had breached $100 in the aftermath of Russia’s invasion of Ukraine, following months of gains driven by the resurgence in demand from a recovering global economy.
If the government doesn’t raise gasoline prices, state-owned oil company PT Pertamina could book $500 million of losses a month, Panjaitan added. “This is a huge number, so we’re watching it carefully,” he said.
Indonesia’s subsidy bill had already ballooned last year to the highest since 2014, which was before President Joko Widodo drastically cut back energy aid to free up more funds for infrastructure development. Inflation has remained muted, reaching 2.18% in January to be within the central bank’s target range of 2%-4%, but an increase to administered prices could fan consumer prices.
Bank Indonesia expects inflation to reach 2.02% in February based on its four-week survey, while prices likely fell 0.05% from the previous month, it said in a Friday statement.
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