Monday, April 23, 2012

Indonesia not to increase oil price immediately

Indonesian lawmakers on Saturday agreed to allow the government to increase oil price should the average crude oil price in the past six months is over 15 percent higher than the assumption in the state budget this year, aborting the government plan to increase the price on April 1.

The average crude oil price in the past six months is about 10. 94 percent higher and the global oil price has shown a decline recently, which means the planned oil price hike was unlikely to happen in the next few months.

The third biggest party in parliament, Democratic Party of Struggle (PDI-P) and a smaller party, the People's Conscience Party (Hanura) walked out of the session just before the deal was reached.

There were 356 votes for the parliament's new decision and 82 votes against it. The House has 560 seats.

By Friday evening the protests against the oil price hike plan continued and some of them had turned to violence.

The anti-oil price hike protesters criticized that there are still many alternatives for the government to address the rising energy subsidy rather than increasing oil price which they say would lead to rising food and other products prices.

The government planned to increase subsidized oil price by one third to 6,000 rupiah (some 0.66 U.S. dollar) per litter on April 1 to cope with soaring global oil price.

As a net oil importing country that provides a huge energy subsidy rising global oil price has hit Indonesia hard as the budget deficit may widen to 2.2 percent of GDP from the initial target of 1.5 percent this year.

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