Oil subsidy to soar to Rp87 T : minister

Jakarta (Antara News) - Energy and Mineral Resources Minister Purnomo Yusgiantoro said oil subsidy in the 2007 state budget is likely to soar to Rp87 trillion from Rp55 trillion previously because of the global oil price spiral.

Electricity subsidy would also increase to Rp42 trillion from Rp34 trillion, the minister said following a limited cabinet meeting at the presidential palace here on Friday.

Yet, the higher-than-expected subsidy would not lead to an increase in the 2007 state budget deficit which had been projected at 1.5 percent as the higher subsidy figure could still be offset by an increase in state revenues from the oil and gas sector, he said.

"We see it (subsidy hike) as being quite secure at the end of this year because there is still balance between the increase in revenues and that in spending. The deficit in the state budget will remain unchanged," he said.

He said oil output until the end of 2007 would stand at 910,000 barrels per day, or lower than the government-set target of 950,000 bpd.

"So, the oil output will reach 95 percent of the target. But the price of our crude oil is 118 percent above target. So, our oil revenues will still be higher than expected," he said.(*)
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