Indonesia government cuts diesel fuel, aviation fuel and LPG prices

Cabinet Secretary Pramono Anung briefs reporters on the third economic policy packages. (Image : Cabinet Secretary)
Cabinet Secretary Pramono Anung briefs reporters on the third economic policy packages. (Image : Cabinet Secretary)

JAKARTA ( – The government on late Wednesday (Oct 7) announced further economic policies, the third in the last one month or so, to spur economic growth and encounter global economic slowdown. The latest policies are focusing on cutting fuel and gas prices that are consumed by both retail and industrial sectors.

In a press briefing at the State Palace, Coordinating Minister for the Economy Darmin Nasution said the government has decided to cut the price of subsidized diesel fuel by Rp200 per liter to Rp6,700 per liter, while high octane fuel Pertamax is reduced to Rp9,000 from Rp9,250 per liter. The newly launched fuel Pertalite fuel price is also cut to Rp8,300 from Rp8,400 per liter previously.

He added aviation fuel used by airliners for international routes is also cut by 5.3 percent, while aviation fuel for domestic flight is reduced by 1.4 percent.

Meanwhile, the 12-kg cylinder liquefied petroleum gas (LPG), used by households as well as small businesses, is reduced to Rp134,000 per cylinder from Rp141,000/cylinder previously. However, the price of low octane Premium fuel is maintained at Rp7,400 per liter.

The minister said the new fuel prices will become effective in three days from today (Oct. 7).

The gas price from well head will be set at $7 per MMBTU in accordance with the capability of industries, to be effective from Jan. 1, 2016. The price of gas for other industries such as petrochemical, ceramic and other industries will be reduced in line with the capabilities of each industries.

“The focus is to stimulate industries, no business intervention. As for subsidy policy, the President asks us to maintain policy consistency,” said Energy and Mineral Resources Minister Sudirman Said.

Minister Sudirman added the state electricity company PT PLN will provide incentives with regard to electricity tariff in three categories, either by cutting the tariff, offering discount or relaxing in electricity bill payment.

The electricity tariff for customers in the category I3 and I4 will be reduced by Rp12-13 per kWh as well as price discount of 30 percent for electricity use from 23.00 p.m until 08.00 a.m period. Industries will also be given flexibility in paying electricity bill by the postponement of electricity payment for up to 40 percent in one year. In addition, the electricity bill for the first six to ten months can be paid in installment from the 13th month.

It appears that the remain low oil price has given room for the government to reduce subsidized and non-subsidized fuel. Minister Sudirman, however, said the fuel price cut is partly decided thanks to efficiency measures undertaken by Pertamina. (*)

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