INDONESIAN GOVT LIKELY TO RAISE FUEL PRICES IN JUNE.

JAKARTA, May 1 Asia Pulse - Amid the upward trend in crude prices in the world market which have reached US$120 per barrel, the Indonesian government is likely to raise domestic oil prices in June in an effort to reduce subsidy and alleviate the state budget's burden.

"The fuel oil price hike issue will eventually be decided politically. To take the decision is not easy," Energy and Mineral Resources Minister Purnomo Yusgiantoro said on Wednesday.

The government is still studying a proposal by the Indonesian Chamber of Commerce and Industry (Kadin) for an increase in the prices of subsidized fuel oil as part of efforts to address skyrocketing fuel subsidy due to the surging global crude prices.

The global crude prices which are hovering at US$120 a barrel are expected to push up fuel subsidy to more than Rp125 trillion (US$13.5 billion).

"President Susilo Bambang Yudhoyono has hinted that raising the prices of subsidized fuel oil is the last option," the minister said.

An ANTARA source said on Tuesday evening however that the finance ministry was now evaluating a plan to raise subsidized fuel oil prices by 28.7 percent in June.

It was said that the price of premium gasoline would be raised from Rp4,500 to Rp6,000 per liter, diesel oil from Rp4,300 to Rp5,500 per liter and kerosene from Rp2,000 to Rp2,300 per liter.