The government will probably spend more than Rp 112.75 trillion (US$12.39 billion) on fuel subsidies this year, as it is unlikely to meet the kerosene-LPG conversion program target, a top official said Monday.

"It is impossible to achieve 100 percent success because during these three months there has been no indication of a significant reduction in fuel consumption," director general for oil and gas at the Energy and Mineral Resources Ministry, Luluk Sumiarso, said.

"So, achieving 75 percent of that target is more feasible for the time being," Luluk told a hearing with the House of Representatives' Commission VII overseeing energy and mineral resources.

Luluk said 100 percent success would have meant the government only needed to allocate Rp 109.85 trillion for this year's fuel subsidy budget.

Achieving 75 percent of the target would mean it would need to allocate an extra Rp 2.9 trillion, he said.

Aside from the government's failure to speed up the kerosene-LPG conversion program, soaring global oil prices are another significant threat to plans to reduce fuel subsidies, he said.

"Today, world oil prices have reached $111. We would never have predicted it," he said.

According to Presidential Regulation No. 71/2005, the government provides subsidies for the consumption of energy resources categorized as special fuels -- including premium gasoline, kerosene and automotive diesel -- to parties categorized as special consumers, including households, small firms, fishery business and transportation and public services.

With the government subsidy, the current retail price for premium gasoline is set at Rp 4,500 per liter, kerosene at Rp 2,000 and diesel at Rp 4,300 per liter.

Luluk said the government was preparing three alternatives to reducing fuel subsidies.

First, limiting the quantity of fuel consumption by urging people to economize its use and develop alternative energy sources.

Second, rearranging the standard subsidy rates for various fuels. Third, it could introduce "rational" fuel retail prices, he said.

"The third alternative is the last option," Luluk emphasized.

The government is also trying to diversify energy resources on the supply side, he said.

It is encouraging the development of gas supplies in cities, accelerating the establishment of coal-fired power plants and introducing more electricity-powered railway trains. (uwi)