Jakarta (VNA) – The House of Representatives ofIndonesia has approved the Government’s plan to cut diesel subsidy by 50percent to 500 RP (0.35 USD) per litre next year, on the back of expectations that crude oil prices willremain low in the aftermath of the COVID-19 pandemic.
According to the Indonesian Ministry of Energy and MineralResources, the IndonesianCrude Price (ICP) is projected to hover between 42 USD and 45USD per barrel in 2021, lower than the 2019 ICP average of 63 USD perbarrel.
Speaking at ameeting on June 29, Minister of Energy and Mineral Resources Arifin Tasrif saidthe lower house also gave its nod to a plan to increase the quota for liquefiedpetroleum gas (LPG) while maintaining the quota for subsidised fuel in the2021 draft state budget (RAPBN).
The Cabinet andthe House are currently drafting the 2021 state budget, withPresident Joko Widodo scheduled to announce the finalised RAPBNduring the state of the nation address in August.
Alloysius JokoPurwanto, an energy economist at the Economic Research Institute for ASEANand East Asia (ERIA), estimated that slashing the diesel subsidy byhalf could save the government about 12.4 trillion RP./.
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