Indonesia asks Pertamina to limit fuel sales

Finance Minister Sri Mulyani Indrawati said on Thursday that Indonesia's government has asked the state energy firm Pertamina to limit its sales of subsidised fuels in order to not increase pressure on energy subsidies.

Indonesia has sacked up its energy subsidies this year to 502 trillion rupiah $34 billion in an effort to keep prices of fuels and power tariffs the same as they rise in global energy prices and the rupiah's depreciation.

This has helped keep inflation in Southeast Asia's largest economy relatively low, at 4.94 per cent last month. The central bank said this gave it room to delay rate hikes.

The subsidy budget assumes sales of subsidised diesel for the entire year will reach 15.1 kilolitres, and sales of subsidised gasoline at 23.1 kilolitres, but current sales volume has already reached that levels, said Isa Rachmatarwata, budgeting director at the finance ministry.

That's why I asked Pertamina to manage sales volume so that the state budget won't face additional pressure, Sri Mulyani said in a news conference.

Pertamina plans to limit fuel sales by making consumers register their vehicles digitally so the company can identify whether subsidies have reached intended recipients, according to its trading unit Pertamina Patra Niaga's Corporate Secretary Irto Ginting.

Ginting said that Pertamina is still waiting for government rules on fuel sales and distribution.

Economists have criticised the government's decision to increase subsidies this year, saying that this would take money away from projects with bigger economic impacts.

Said Abdullah, head of parliament's budgetary committee, said the government and parliament are going to discuss the effectiveness of subsidies.

If we rely on the state budget without improving the mechanism of subsidies, many priority agendas for national development will not be achieved, he said.