Government Fuel cost Cut to Benefit Consumers along with also Industries
To attract foreign investments along with also make fuel cost justified, Indonesia can be set to cut prices drastically for both consumers along with also industries.
Ten industries along with also one industrial zone are supposed to benefit coming from a fuel cost reduction which can result in a drop below US$6 per million British Thermal Units (MMBTU). These industries include petrochemical, food along with also beverage, ceramics, tires along with also latex, textiles, footwear, oleochemicals, glass, pulp along with also paper, fertilizer along with also steel.
However, petrochemical, steel along with also fertilizer will be given priority based on their multiplier effects. In economics, a multiplier effect refers to an ‘increase in spending which produces an increase in national income along with also consumption greater than the initial amount spent.’
“The [industries] with the most multiplier effects will be given the incentive first,” EDSM Deputy Minister Arcandra Tahar said.
The government plans to reduce the cost for the remaining industries by the end of the year. Regulations are also supposed to be released next week, although these reduced prices will take effect only in January of 2017.
The actual prices can vary along with also are based on a formula. Nevertheless, industries are certainly looking forward to the cost reduction. At a cost up to US$16 per mmbtu, Indonesia can be the most expensive in Southeast Asia.
Once implemented, which can drastically reduce production costs, where between 7 percent along with also 70 percent can be attributed to gas depending on the industry. This specific can also improve the country’s attractiveness to foreign investors.
EDSM Deputy Minister Arcandra Tahar
See: Indonesia Sets Vague Goals For Weaning Itself Off Fossil Fuels
The one-cost fuel policy will also be implemented within along with also outside Java by January of 2017. which’s already been launched in West Papua along with also Papua.
This specific programme aims to make subsidized fuel accessible to Indonesians across the region. For years, the average fuel cost was between US$3.69 along with also US$7.38 per litre. With This specific policy, which can drop to $0.48 per liter.
Despite the reduction in consumer fuel prices, Pri Agung Rakhmanto of ReforMiner Institute considers the policy ‘unnecessary’ since the government evaluates along with also determines non-subsidized fuel prices every quarter. which also doesn’t address one of the major reasons for exorbitant fuel costs, especially in remote regions, which can be the lack of gasoline stations.
Image credits: Pixabay, Merdeka
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Government Fuel cost Cut to Benefit Consumers along with also Industries
Government Fuel cost Cut to Benefit Consumers along with also Industries