Gov’t sets basic price formula for certain fuels; diesel oil and kerosene remain subsidised

Jakarta – The Ministry of Energy and Mineral Resources (ESDM) has issued a new Ministerial Decree, Number 439 K/MG.01/MEM.M/2023, which sets the base price formula for certain types of fuel oil. In the decree, the main focus is on diesel oil and kerosene, fuels that still receive subsidies from the government.

According to Tutuka Ariadji, Director General of Oil and Gas, the basic price formula for certain fuel types includes acquisition cost, distribution cost, storage cost, and margin.

“This formula change is part of the Government’s effort to calculate the Retail Selling Price of Certain Types of Fuel, which in turn becomes the basis for calculating the compensation paid by the State to the Business Entity Implementing the Assignment of Supply and Distribution of Certain Types of Fuel,” Tutuka said in an official statement.

In the context of the base price formula, the first part of the decision explains the cost components for JBT diesel oil and kerosene. At the same time, the second part provides further details, with a formula of 102.49% Market Index Price (HIP) plus Rp 263 per litre for kerosene and a formula of 100% HIP plus Rp 868 per litre for diesel oil.

This formula becomes the reference for setting the base price per litre of JBT. Despite the changes in the formula, Tutuka emphasised that the amount of diesel oil subsidy remains unchanged.

“Changes in the basic price formula of JBT diesel oil do not affect the subsidy amount of Rp 1,000 per litre. The components of the base price of JBT diesel oil still include acquisition costs, distribution costs, storage costs, and margins,” Tutuka said.

With the enactment of this Decree, the previous Decree of the Minister of Energy and Mineral Resources, Number 148 K/12/MEM/2020, is revoked and deemed invalid. The government hopes that this step will provide clarity and transparency in managing the basic price of certain fuel types while ensuring the continuity of subsidies for people who use diesel oil and kerosene. (Hartatik)

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