Indonesia mulls to cut fuel prices

Videos
Photos

(Xinhua)
Updated: 2008-10-29 16:51

JAKARTA -- Indonesia is considering to lower fuel prices following the decline of global oil prices, according to a paper here Wednesday.

Indonesian President Susilo Bambang Yudhoyono was quoted by the Jakarta Post as saying that the government was studying the possibility of a fuel price cut.

"We are studying intensively a plan to lower the fuel prices. If it's considered effective, I will make the decision to lower them," said Susilo after meeting with Finance Minister Sri Mulyani Indrawati and Energy and Mineral Resources Minister Purnomo Yusgiantoro.

"If (oil) prices keep falling and our (subsidy) calculation is sufficiently sound, it is my moral obligation to reduce the burden on our people," he said.

Analysts said a cut in fuel prices would drastically boost the popularity of the Yudhoyono administration just months ahead of the upcoming elections, especially among middle- and lower-income voters.

Indonesia has long maintained a hefty subsidy to keep fuel for motorists and households below international market prices.

However, Energy minister Purnomo said the government was unlikely to lower the cost of all type of fuels, because the subsidy for most of the fuel this year was expected to exceed the allocation, due to a spike in global oil prices earlier this year.

Ministry figures show subsidy spending reached $13 billion as of October, far higher than the initially allocated.

"I think the most feasible fuel to see a price cut immediately is Premium gasoline," Purnomo said.