REPUBLIKA.CO.ID, JAKARTA -- Finance Minister Sri Mulyani Indrawati has confirmed that rising oil prices in the international market will affect the energy subsidy burden set in the 2018 State Budget (APBN). She explained that the average price of Indonesian Crude Price (ICP) of oil has exceeded the assumption set in the State Budget (APBN) at $48 dollars per barrel.

To that end, the government is paying attention to the issue so that Pertamina does not bear the subsidy burden too much and it still can carry out its services to the people. "We have discussed the mechanism to maintain people's purchasing power, mainly in the face of pressure from oil price. Pertamina as a corporation still has a good concern," she said.

She added that the government is also communicating intensely with the House of Represents (DPR) on the rise of world oil prices so that the sustainability of the state budget will be maintained.

"We hope that our political communication with the House of Representatives would continue to be maintained. The use of state budget funds should be watched. This includes funds used outside those set in the APBN Law, or funds already set in the state budget but with mechanism that still has to be submitted to the DPR," she said.

Earlier, the Ministry of Finance noted the average price of ICP oil in the period of January-March 2018 has reached $63.02 dollars per barrel or higher than that in the same period of 2017 which amounted to $51.03 per barrel.

The significant increase in prices in addition to improving global economic activity is also influenced by OPEC's decision to cut production by the end of 2018.

Price increases are also caused by geopolitical turmoil in some areas that provide a positive sentiment on world crude oil prices. This condition caused the oil price movement in March 2018 to be different from the historical average which tended to decline in the period of March.

Although the subsidy burden on the state budget is increasing, the rise in oil prices could have a positive impact on state revenues in 2018.

On a separate occasion, Budgetary Director General Askolani added that the realization of energy subsidy spending until mid-April 2018 has reached Rp25.3 trillion, especially for fuel subsidy Rp15.7 trillion and electricity subsidy Rp9.6 trillion.

From the absorption of energy subsidies, Rp9.3 trillion was used to pay arrears to Pertamina and state-owned power firm PLN last year amounting to Rp6.3 trillion and Rp3 trillion respectively.

"The realization of subsidy in Q1 2018 increased from that in the first quarter of 2017 due to the the settlement of subsidy underpayment. The previous year's arrears were paid using reserve ceiling," said Askolani.

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