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A Bad Case of Gas

LPG Cooking Gas Increase of 68% Sparks Inflation Surge Across Indonesia

Bali News: Bali, Indonesia, LPG, inflation, liquefied petroleum gas, Pertamina, Susilo Bambang Yudhoyono
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A sudden increase in the cost of LPG cooking gas by the State-owned Petroleum Company (Pertamina) has seen liquified gas prices increase by more than 60% and has shock wave across the Nation sparking a rapid round of inflationary price increases.

The LPG increase - a decision apparently made unilaterally by Pertamina without consulting the President –  shocked President Susilo Bambang Yudhoyono (SBY) who took to Facebook to publicly question the increase.

The President, noting the growing public protest over the sudden price increase for 12 kilogram tanks of LPG, claimed that the decision made by by Pertamina now requires Presidential intervention because of its wide-ranging effects on society.

Yudhoyono said that while he knew that the State Audit Board recorded losses of Rp. 7 billion (U$560 million), the solution to that situation was not to increase LPG prices by 68%. SBY said that such a large and sudden increase would result in rapid increases of goods and services, creating burdens on the economically disadvantaged.

Reacting to the price increase, SBY instructed the Vice-president to rapidly convene the cabinet and seek a solution that avoids inflation and burdens the public.

The cost of a 12-kilogram canister of LPG prior to the increase was Rp. 70,200 (US$5.60), but is now selling for Rp. 117,708 (US$9.40). Prices in the marketplace vary, averaging Rp. 130,000-Rp. 150,000 (US$10.40 – US$12). Following the increase, prices in Jayapura (Papua) rose to Rp. 310,000 (US$24.80) for the 12-kilogram LPG canister.

In Bali, the 68% increase in price has had an immediate impact on pricing of goods and services in Bali. In the Klungkung Market in east Bali, the cost of basic commodities such as rice, cooking oil end eggs have increased significantly since January 1, 2013. Rice has increased 6%-11% rising as high as Rp. 9,000 a kilogram. Cooking oil has increased 20% to Rp. 12,000 per kilogram. Meanwhile, eggs have gone up 37.5% from Rp. 800 to Rp. 1,100 each.

Vendors are complaining that consumers have reduced the quantity of good purchased, buying smaller amounts of key items to ensure they are still able to place food on their families’ tables.

Traders and consumer remain hopeful that the emergency cabinet meeting will result in a reconsideration of the economically precipitate increase in LPG cost.

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