Indonesia May Lower Retail Gasoline Prices by 13%

By Naila Firdausi and Bambang Dwi Djanuarto

Nov. 4 (Bloomberg) -- Indonesia may reduce gasoline prices by as much as 13 percent as global crude oil prices fall, said an official at the Energy and Mining Ministry.

``We have proposed to President Susilo Bambang Yudhoyono to cut gasoline prices by between 500 rupiah and 800 rupiah a liter,'' from the current price of 6,000 rupiah (67 U.S. cents), Evita Legowo, director general of oil and gas at the energy ministry, said today.

Indonesia increased retail gasoline prices by 33 percent on May 24 after crude oil futures in New York doubled to $132.19 a barrel in the 12 months to May 23. After reaching a record $147.27 on July 11, ``crude costs have fallen and stayed at $60 to $65 a barrel,'' Legowo said.

Southeast Asia's biggest economy, which has already exceeded its 2008 oil subsidy target, may have to spend an extra 3 trillion rupiah to 5 trillion rupiah in November and December if gasoline prices were cut, she said.

The country spent 132 trillion rupiah on fuel subsidies between January and October, more than the 126 trillion rupiah allocated in the 2008 budget, Legowo said.

The benchmark crude futures contract on the New York Mercantile Exchange was at $63.29 a barrel in electronic trading at 11:32 a.m. Jakarta time.

To contact the reporters on this story: Naila Firdausi in Jakarta at nfirdausi@bloomberg.net; Bambang Dwi Djanuarto in Jakarta at Or bdjanuarto@bloomberg.net.