Indonesia plans to cut price of premium gasoline

Business Materials 7 November 2008 08:16 (UTC +04:00)

The Indonesian government plans to cut the retail prices of premium gasoline by more than 6 per cent from December 1 to combat an economic downturn and to reflect falling global oil prices, media reports said Friday.

Finance Minister Sri Mulyani Indrawati said a plan to reduce premium gasoline was aimed at easing inflation and spurring economic growth, dpa reported.

The 500-rupiah (5-US-cent) cut would bring the price of premium gasoline to 5,500 rupiah per litre, but the government plans to keep the prices of subsidized diesel and kerosene unchanged.

"The decrease is expected to revive consumer spending as well as the business climate," Indrawati was quoted by the Jakarta Post as saying, adding that the government was responding to public demand for cheaper fuel. "This will also counter the impact of the global financial crisis on our economy."

To reduce the country's multibillion-dollar subsidy scheme, the government in March raised domestic fuel prices by an average of 28.7 per cent as oil prices skyrocketed on the world markets.

The move triggered street protests across the world's fourth-most populous nation and led to a decline in the popularity of President Susilo Bambang Yudhoyono.

Indrawati said the government would evaluate premium gasoline prices monthly to keep domestic price in line with global crude prices.