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 | Fuel costs in Indonesia rose 128% in 2005 under pressure of rising oil prices and the economic drain of fuel subsidies on the national budget. Before the price rise, fuel subsidies were estimated to account for over 40% of budget expenditure and to exceed US$10 Billion. International prices have continued to rise with $70+ per barrel being exceeded on a number of occasions in early 2006 so analysis's expect a further increase of about 70-80% in the next few months. Fuel prices are expected to stabilize at around Rp8,000 per liter or US$0.84 mid 2006 up from Rp1,450 or US$0.15 per liter in early 2002. The total increase over this 2 year period exceeds 400%.
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| Kerosene prices at the pump have maintained parity for the past 2-3 years in an attempt to stop blending practices but in practice the government has often made kerosene available at Rp300 to Rp600 below pump prices to poor communities. A lot of this fuel is used by fishermen for outboards. There are no current subsidies but the considerable gap between the pump price of kerosene and petrol is unlikely to continue.
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| Electricity costs in Indonesia rose 20% in 2005 and analysis's predict a further increase of over 100% in 2006. Note these increases lag well behind fuel increases and so actual increases may be higher than predicted.
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| Artisanal fishers in Indonesia have enjoyed heavily subsidized fuel now for over 10 years and the trend has been towards building larger dugout canoes with plank sides to cope with the larger outboard engines. 40hp 2-stroke kerosene engines are the industry norm. These special engines were manufactured for the Indonesian market. They are sold only in Indonesia and Thailand. The subsidy for poor consumers has been kept in place because kerosene is used in domestic lighting and cooking. Kerosene is almost identical to jet fuel and it is more expensive to manufacture than petrol so it is clear that subsidies will be phased out in the near future.
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| Sail is still popular in many areas. Pariaman, West Sumatra. This boat had no engine mount and it is paddled or sailed.
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| Kerosene mixes with other fuel and any price disparity gives fuel agents a big incentive to blend it with petrol for sale to island & rural communities. Kerosene mixes cause petrol engines to run at higher temperatures and to be hard to start. Combustion is not as efficient and exhaust smoke levels are high. The end result is excessive carbon build-up and rapid wear especially in 2 stroke engines that have no oil sump. Service life for kerosene outboards is generally agreed to be less than 50% of petrol powered engines and both types of fuel must be carried. Kerosene engines are more expensive to manufacture because they require a twin fuel system and expensive ceramic components to withstand the higher combustion temperatures. Kerosene outboards are not a sustainable propulsion solution and they will not be considered for boats designed and built by the project.
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