JAKARTA. The government is set to announce new fuel prices on Wednesday, according to Coordinating Economic Minister Sofyan Djalil.

Sofyan has previously signaled that the adjustment will be followed by the implementation of a fixed-subsidy policy, in which fuel subsidies would be fixed at certain amount, say Rp 500 (4 US cents) or 1,000 per liter, so as to safeguard the state budget against any unwanted fluctuation in oil imports from external factors.

Energy and Mineral Resources Minister Sudirman Said has sent a similar signal, saying the plan would be announced before New Year's Day.

"I don't want to talk about it [the new price scheme]. But there will be a meeting to finalize it at the Coordinating Economic Minister's office this afternoon. It will probably be announced tomorrow," Sudirman said earlier at the Palace.

On Monday, the Office of the Coordinating Economic Minister held a meeting with the Trade Ministry, Bank Indonesia (BI) and the Central Statistics Agency (BPS) to discuss the possible inflationary impact of the policy’s implementation.

In November, President Joko “Jokowi” Widodo increased the prices of subsidized fuel. Premium gasoline was increased by 31 percent to Rp 8,500 per liter and diesel was increased by 36 percent to Rp 7,500 per liter in a bid to reallocate costly fuel-subsidy spending to growth-generating infrastructure projects.

However, recent decreases in oil prices mean that the price of both Premium and diesel in Indonesia are now trading at a higher price than their true value. (Ina Parlina)

Editor: Hendra Gunawan