House Urged Govt to Lower Fuel Prices as Global Oil Prices Collapse

15-04-2020 / KOMISI II

Member of Commission II of the House of Representatives, Guspardi Gaus, urged the government to adjust the domestic fuel prices following the big drop in global oil prices, saying the government should lower the fuel prices at the economic price level to ensure that lower-income people could afford to buy the premium fuel (88-octane gasoline/Indonesia’s subsidized and cheapest type of oil) and diesel fuel.

 

“Reducing non-subsidized fuel prices such as Pertalite and Pertamax also has to be adjusted to current purchasing power, while ensuring the stock and distribution of the fuel amid the coronavirus outbreak,” he said in a written statement to Parlementaria, on Wednesday (15/4/2020). 

 

He noted that the policy to reduce fuel prices was very urgent. The government should take action regarding the fuel price decline to avoid an impression that the government exploited its people by providing too-expensive fuel prices rather than their economic values. He went on saying that the global crude oil prices continued to decline as the crude oil demand was diving amid the coronavirus outbreak.  

 

“It is a good moment for the government to formulate a policy to reduce fuel prices. It is not only because of the sharp decline in global crude oil prices but also the coronavirus pandemic that has slowed the economy following the implementation of the large-scale social restrictions (PSBB) that curbs people’s movement and halts a great deal of upstream and downstream industries,” said legislator from West Sumatera II constituency.  

 

He also stressed that the potential layoffs across various industries had led to a severe decline in purchasing power, saying that under the current exchange rate where the rupiah closes to Rp 16,000 per US dollar and the global oil price is $33 per barrel, meaning that the crude oil price is Rp 3,500, added with processing costs, transportation costs, value-added tax (PPN), the fuel price could be Rp 4,500.

 

“If Pertamina’s profit of 10 percent of sales is included, the fuel price can be Rp 5,000. Perhaps the fair price is Rp 5,000. As the global crude oil prices are declining, Indonesians should have enjoyed the lower prices to help out people’s economy amid the economic slowdown from the coronavirus outbreak,” he said. (dep/sf) 


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