Goverment prepares loan facility for fuel stations

JAKARTA. The government will set aside Rp 500 billion (US$55.6 million) to provide soft loans for fuel station owners in Java and Bali to prepare the stations for the implementation of subsidized fuels restriction plan, according to an official.

The government has not determined the loans’ terms and conditions, but the Finance Ministry has agreed to include the funds in the revision of the 2012 State Budget, Energy and Mineral Resources Ministry’s oil and gas director general Evita Herawati Legowo said.

“We have discussed with the Finance Ministry. The fund is ready and now we’re going to think about the technical details of its disbursement,” she told reporters after a video conference at her office in Jakarta on Tuesday.

According to the ministry’s data, as of Tuesday, out of more than 3,000 fuel stations in Java and Bali, 295 stations have yet to sell non-subsidized fuels. As a result, each station would require investment to install new tanks and dispensers to store and sell the non-subsidized fuels. As many as 687 stations in the two islands still need to switch the function of their tanks from storing subsidized fuels to non-subsidized fuels.

Pertamina spokesperson Mochamad Harun reported earlier that the 295 stations need a total investment of Rp 115.9 billion or Rp 393 million per station.

Despite the House of Representatives’ skepticism that the government would be ready to ban all private cars from buying Premium (the heavily consumed subsidized fuel), Evita said the government would continuously push the preparation for the implementation of the policy.

“Our last meeting with House Commission VII [overseeing energy] requested us to comprehensively study all options to control the amount of the fuel subsidy, including cutting the subsidy for Premium,” she explained.

The chairman of the Association of Fuel Station Owners (Hiswana Migas), Eri Purnomo Hadi, requested that the government delay the policy’s implementation deadline. He argued many station owners were not ready to ban private cars from buying Premium as they had not secured access to soft loans for investments.

The association said it was better if the government raised the price of Premium because it did not require station owners to upgrade their stations and the government would be freed from the obligation to prepare sophisticated supervision to prevent distortions.

Finance Minister Agus Martowardojo said that there was a growing discussion between the government and the House to raise fuel prices.

“Concerning fuel prices, I must say that we still want to comply with the 2012 State Budget Law that stipulates restriction on fuel so that the usage volume will not exceed 40 million kiloliters and to look for alternative energy in form of gas,” Agus told reporters here Tuesday.

“I still see that the overall tendency still aims toward restrictions [of fuel usage] and conversion [toward gas]. I cannot answer for certain if there is a possibility for another option [raising fuel prices] because I have not seen a formal decision made between the government and the House. So, let us let the energy and mineral resources minister handle this,” he added.

The government and the House have failed to reach an agreement on how the country will deal with its energy policy in the year 2012.

Initially, the government insisted on maintaining fuel prices and at the same time, applying the fuel restriction policy and developing alternative energy sources. (Rangga Fadhillah and Hans David Tampubolon/The Jakarta Post)