Raising Fuel Oil Price More Advantageous

Jakarta (Antara Bali) - Raising the prices of subsidized fuel oils is more advantageous than a policy to limit their consumption, an economic observer said here on Friday.

"Based on economic calculations, raising the fuel oil prices is a more rational policy. There will be no need to prepare infrastructure and monitoring instruments," Komaidi Notonegoro of ReforMiner Institute, told a discussion at the Economic Journalists Communication Forum.

He said if the prices of subsidized premium gasoline and diesel oil were raised by Rp1,000 per liter, there would on a national scale be a saving of Rp38.7 trillion and if they were increased by Rp1,500 per litter, a saving of Rp57.4 trillion.

But such a fuel oil price hike would cause  an increase of 1.07 percent in inflation  (if the price increase was Rp1,000 per liter) and an increase of 1.58 percent (if the price increase was Rp1,500 per litter).

He said that limitation of subsidized premium in Java and Bali would only save Rp26.71 trillion and Rp41.91 trillion if diesel consumption was also cut.(T007)