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Indonesian gov't divided on new fuel scheme

Publication Date : 11-09-2012

 

Downstream oil and gas regulator BPH Migas’ plan to ban luxury cars from using subsidised fuel has received a cool response from Indonesia's Energy and Mineral Resources Ministry.

BPH Migas chief Andy Noorsaman Sommeng said in Jakarta yesterday that the agency hoped to issue a regulation this month that would ban luxury vehicles from using subsidised fuel, with Jakarta serving as a “pilot project” before rolling the regulation out nationally.

“Our technical team has prepared a draft of the new rule and [an internal] committee will make the final decision,” Andy said in Jakarta.

Jakarta was chosen to introduce the scheme as the city’s consumption of subsidised fuel, particularly of Premium gasoline, which is sold for  4,500 rupiah (49 US cents) per litre, has been far above quota in recent months, according to Andy.

In August, Premium gasoline consumption in Jakarta topped 1.41 million kilolitres, 37.4 per cent more than the government’s allocation of 1.03 million kilolitres for the month, according to information from state energy firm PT Pertamina.

Overall, the government has allotted funds for 40 million kilolitres of subsidised fuel this year, including Premium gasoline.

However, national subsidised fuel consumption topped 29.48 million kilolitres in August, prompting the government to ask lawmakers at the House of Representatives to increase the quota for subsidised fuels by 4 million kilolitres.

Under a presidential regulation on the consumption of subsidised fuel, BPH Migas has been authorised to issue a rule to guarantee that subsidised fuel consumption does not exceed the initial allocation.

The regulator’s planned scheme, however, has met with a negative response.

Deputy Energy and Mineral Resources Minister Rudi Rubiandini told The Jakarta Post that while he applauded the regulator’s idea, the scheme was “impossible” to implement.

Meanwhile, the ministry’s director general for oil and gas, Evita Herawati Legowo, said that while the presidential regulation did indeed allow BPH Migas to issue its own rules to limit fuel consumption, the regulator had to first discuss such plans with other relevant ministries.

“They cannot hastily issue a new rule, because in the end the final decision must represent all of us as one entity,” Eva said.

Analysts have said that the diverging opinions of government officials on responding to the increased use of subsidised fuel indicated that they did not have a clear vision on how to cope with the problem.

Early this year, the government proposed increasing the price of subsidised fuel 6,000 rupiah from 4,500 rupiah per litre to reduce the amount the government would have to spend on the subsidy.

The plan was rejected by the House after a series of protests in the capital.

Meanwhile, Pri Agung Rakhmanto, the executive director of the ReforMiner Institute, an energy think tank, said that the new plan was “unrealistic” because the infrastructure for limiting the fuel consumption had yet to be built.

“The government cannot publish a new rule in a hurry just because they think fuel consumption is going to be greater than the quota. What the government can do is ask the legislators to give it a go for the additional fuel quota plan,” Pri said in a text message.

US$1 = 9,585 rupiah

 

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