Pekanbaru, Riau, Jan 8 (Antarariau.com) - The provincial administration of Riau said it is feared that the region would have a deficit in its regional budget on falling prices of oil.
Riau is one of the countrys largest oil producing regions and relies more on oil and gas for regional income.
Acting Governor of Riau Arsyadjuliandi Rachman said the regional budget was calculated on oil price at US$60 per barrels , but now the prices have dropped to less than US$35 a barrel.
"We expect deficit but it must not force us to use debt. It would not good for us," the governor said.
He said fund from the sales of the provinces oil and gas production share for the third quarter of 2015 had not even been paid on sharp price fluctuation.
Calculation , therefore, has to be made again in 2016, he added.
Currently the oil price has continued to be on the decline and there was no sign of recovery, he said.
"This would have bad effect on the provinces regional budget, which was set at Rp11.2 trillion," he added.
This year, Riaus oil and gas income target was set at Rp4 trillion on assumption that oil price was US$60 per barrel.
"Now the price already shrank 50 percent," he said.
The governor, therefore, ordered for efficiency in spending and less official travels.
"No need to go to Jakarta in groups only to hear speeches," he said.
Oil prices in the world market fell to record low in years at around US$33 per barrels on large stock and weak demand especially from industrialized countries.
Riau Expects Deficit in Regional Budget on Falling Oil Prices
