Indonesia may import more fuel following subsidy ban

Indonesia's state oil and gas firm PT Pertamina said that the government's plan to cut oil subsidies next year would force the firm to import massive quantities of high-octane fuel in the year to meet rising demand, local media reported Monday.

Starting from January first, subsidized Premium fuel would be off limits to private car owners in Jakarta and the whole of Java and Bali from July 1. Drivers would have to buy higher-octane Pertamax fuel at 6,500 rupiah (some 0.72 U.S. dollar) a litter, almost 50 percent more expensive than Premium, the Jakarta Globe said.

The government has long planned to phase out subsidies altogether by 2014 and has been considering options for the first set of subsidy cuts since the middle of this year.

A governmental spokesman said most Pertamax was produced at Pertamina's Balongan refinery in West Java, which has a production capacity of 325,000 barrels per day.

The spokesman said Pertamina plans to double the capacity there by 2016. The government had been inviting investors to fund the expansion, which is estimated to cost 5.2 billion U.S. dollar.
(source:xinhua)