Indonesia plans to raise import duties for luxury cars as one of several possible measures to reduce fuel consumption. That’s almost embarrassing for a member of the Organization of Petroleum Exporting Countries.
The planned import duties for luxury cars are part of government efforts to reduce nationwide fuel consumption and keep fuel subsidy spending within the target of 76.5 trillion rupiah this year, said Aburizal Bakrie, coordinating minister for the economy.
Meanwhile, a senior energy ministry official announced that the government would increase fuel prices for companies in the mining and-get this-oil industries later this month.
Oil sector squeezed...
“The Ministry of Energy and Mineral Resources will issue a decree that will allow the hikes in fuel prices in the mining and oil industries,” said Iin Arifin Takhyan, the ministry’s director-general of oil and gas.
The planned increases will go into effect immediately after government approval and are part of government efforts to cope with record-high global oil prices, Iin said.
Indonesia asked OPEC to raise oil production in an effort to cut world oil prices, according to Minister of Energy and Mineral Resources Purnomo Yusgiantoro. “What’s important is that oil prices must come down,” Purnomo said in mid-July.
Indonesia’s current oil output of less than 1 million b/d falls well short of its OPEC quota of 1.425 million b/d.
The country won’t meet an official crude oil and gas condensate output target of 1.125 million b/d for 2005 due to “internal oil drilling difficulties” faced by international producers, said Kardaya Warnika, chairman of the country’s upstream oil and gas regulator BPMigas.
...Foreigners blamed
Other output-related problems included a delay until the second half of this year in tapping Unocal Corp.’s blocks around deepwater West Seno oil field off East Kalimantan, Kardaya said without explanation.
Kardaya said falling production from Caltex Corp. oil fields to 480,000 b/d so far this year from 485,000 b/d last year also contributed to the lower output target. As a result, Indonesia cannot meet the oil output target stipulated in the 2005 budget and will instead produce around 1.075 million b/d.
Producers may be facing internal oil drilling difficulties-whatever that may mean. But reports suggest that international investors have fled Indonesia’s oil sector in recent years due to deep-seated concerns about the security of investment in a country that suffers from rampant corruption, a ruinous infrastructure, and an unpredictable judiciary.
Meanwhile, Vice-President Jusuf Kalla blames the harm to Indonesia’s economy on the surge in fuel consumption and subsidies brought about by high car sales, a point only faintly underscored by forecasts of the Indonesian Automotive Industries Association that sales will rise to 550,000 units this year from 483,295 units in 2004. ✦
