JAKARTA. President-elect Joko “Jokowi” Widodo says he is ready to make the unpopular decision of raising subsidized fuel prices after failing to persuade President Susilo Bambang Yudhoyono to take the action.
Jokowi and Yudhoyono had a closed-door meeting in Nusa Dua, Bali, late on Wednesday, where Jokowi persuaded Yudhoyono to reduce fuel subsidies in the 2015 State Budget, meaning that Yudhoyono’s administration would have to raise subsidized fuel prices. The move is necessary for Jokowi to have adequate fiscal room to carry out his priority programs.
“[Yudhoyono] said the time was not the right time to raise fuel prices. I am ready to become unpopular [by raising fuel prices]. But we have to know that we should reallocate budget [funds] to productive sectors: to finance small and medium enterprises, to subsidize farmers and fishermen, and so on, instead of to [subsidize people] buying fuel, cars,” Jokowi told reporters upon his arrival at City Hall on Thursday morning.
Jokowi, however, declined to disclose details regarding the timeline for such a plan. “I am still governor. It is now the authority of pak SBY,” he said.
Jokowi will instead encourage his coalition members at the House of Representatives to propose reducing fuel subsidies at the budgetary body. “We have a month for that. Technicalities will be handled by the transition team,” he said.
The government was granted a subsidized fuel quota of 46 million kiloliters (kl) this year, which comprises 29 million ki of premium gasoline, 900,000 kl of kerosene and 16 million kl of diesel.
In the last few weeks, many regions have been facing shortages of subsidized fuel supplies from state-owned oil firm Pertamina, but the company insists that it must ration subsidized fuel to avoid breaching the quotas before the end of the year.
As of Tuesday evening, however, Pertamina had lifted the restrictions on subsidized-fuel sales around the country.
The President submitted to the House of Representatives on Aug. 16 a draft budget for 2015, totaling Rp 2.02 quadrillion (US$172 billion), about 15 percent of which will be spent just on maintaining the subsidies. Yudhoyono added that he had no plans to reduce energy subsidies, despite repeatedly giving his assurances that he would do his utmost to help the next government.
He has allocated Rp 363.5 trillion for energy subsidies next year, a significant rise from the Rp 350.3 trillion in this year’s budget. The funding for the fuel subsidy alone will amount to Rp 291.1 trillion, compared to Rp 246.5 trillion in the 2014 budget. (Sita W. Dewi)
