Govt may revive fuel restriction plan

JAKARTA. After legislators refused to increase fuel prices, the government may revive its plan to limit sales of subsidized fuel for private cars in a bid to reduce the never ending swell in the country’s energy subsidy spending.

Energy and Mineral Resources Minister Jero Wacik said that as part of the program, the government considered prohibiting private cars with engine capacities larger than 1,500 cc or 2,000 cc from buying subsidized fuel products.

That measure has been taken because over the past six months the average Indonesian Crude Price (ICP) had not touched 15 percent above the revised 2012 state budget of US$105 per barrel, wherein the government could not increase the price of subsidized fuels. As of March, the average price was $116.

Jero said the plan also aimed to ensure that the fuel subsidy was enjoyed by deserved targets. Currently, around 70 percent of the subsidy was largely enjoyed by wealthy people.

“We want to create a system that is more fair. We don’t want to spend more than Rp 200 trillion ($21.81 billion) for subsidies for those who don’t deserve any subsidies. Justice is the key word,” he told reporters after accompanying Coordinating Economic Minister Hatta Rajasa at a courtesy call with Kazakhstan President Nursultan Nazarbayev in Jakarta on Friday.

The Transportation Ministry’s data shows that in 2011, Rp 77.9 trillion, or 48 percent of Rp 165.2 trillion in fuel subsidies, was consumed by private cars. The amount was much larger than that consumed by public transportation vehicles, which used only Rp 4.1 trillion, motorcycles Rp 58.8 trillion and commercial vehicles Rp 5.9 trillion.

However, Jero revealed his ministry had not decided which mechanism would be taken to control the consumption of subsidized fuels. He acknowledged that there were many options.

A member of downstream oil and gas regulator BPH Migas, Ibrahim Hasyim, said the limitation policy will need additional technology to enable effective supervision. The technology could be used for installing identification equipment in cars that would otherwise be banned from buying the subsidized fuel — or, perhaps the simplest way could be placing stickers on their cars.

“However, we will still discuss it with the Energy and Mineral Resources Ministry,” he said.

If the government decided to use sophisticated technology, the process would take some time because the procurement of equipment must be conducted through tender processes that might take as long as
six months.

“If we use the stickers, we have to have complete data on all private cars in the country. We have discussed this with the police,” Ibrahim said.

“The most important thing is if the government wants the implementation of the limitation policy to be successful, it has to widely inform the people about the details of the policy so that they will understand,”
he added.

As reported earlier, the government has planned to issue a regulation on the limitation policy this May. This regulation is in response to the fact that many luxury cars in the country still purchase subsidized fuel after the price of non-subsidized fuel products surpassed Rp 10,000 per liter.

Fuel subsidies

• In 2011, private cars enjoyed Rp 77.9 trillion or 48 percent of Rp 165.2 trillion fuel subsidies

• Public transportation vehicles only benefited by Rp 4.1 trillion from the subsidies, with motorcycles and commercial vehicles at Rp 58.8 trillion and Rp 5.9 trillion, respectively.

Restriction

• Private cars with engine capacities larger than 1,500 cc or 2,000 cc may be banned from buying subsidized fuels

(Rangga D. Fadillah/ The Jakarta Post)