| By Andi Abdussalam |
Jakarta, Jan 27 (ANTARA) - The government is preparing to implement its policy of limiting subsidized fuel oil consumption as of April this year but observers say that raising the prices will be a more advantageous and realistic option. "Based on economic calculations, raising the fuel oil prices is a more rational policy. There will be no need to prepare infrastructure and monitoring instruments," Komaidi Notonegoro of ReforMiner Institute, told a discussion at the Economic Journalists Communication Forum. He said that raising the prices of subsidized fuel oils is more advantageous than a policy to limit their consumption. Komaidi's view was shared by economist Nugroho SBM of Diponegoro University. Nogroho said that increasing the present gasoline price will be a more realistic policy than the government's plan to limit subsidized fuel oil consumption to reduce its subsidy burden, an economist here said. "It will be very difficult to control the fuel oil market if there is a wide price disparity between two categories of oil (subsidized and non-subsidized gasoline). The condition could lead people to seek profit illegally," Nugroho. Besides, raising prices would be more advantageous. According to Komaidi, if the prices of subsidized premium gasoline and diesel oil were raised by Rp1,000 per liter, there would on a national scale be a saving of Rp38.7 trillion and if they were increased by Rp1,500 per litter, a saving of Rp57.4 trillion. He said that limitation of subsidized premium in Java and Bali would only save Rp26.71 trillion and Rp41.91 trillion if diesel consumption was also cut. The government is planning to restrict the use of subsidized gasoline to public transport and motorcycles as of April 1, in an effort to cut oil subsidy which has been burdening the state budget. Based on Law No. 22 / 2011 on the 2012 state budget, the government is required to limit subsidized premium gasoline consumption in Java and Bali as of April 2012. The program will start in Jakarta and its buffer towns of Bogor, Depok, Tangerang and Bekasi (Jabotabek) as of April 1, 2012. It will cover Surabaya in East Java in June and the whole Java and Bali at the end of 2012. Premium gasoline consumption cuts in Sumatra will begin in April 2013 and diesel consumption limitation in June 2013. The government decided to carry out subsidized fuel consumption limitation because consumption of subsidized fuels in 2011 reached 41.7 million kiloliters or about 103.3 percent of the 2012 revised budget quota. Virtually, the advantage of raising prices as compared to cutting consumptions was also realized by the finance ministry. He said that the figure was higher than the figure that could be saved with the implementation of subsidized fuel consumption cuts and the fuel-to-gas conversion program in Java and Bali. Rofyanto said that the consumption cuts and conversion polices based on the set But such a fuel oil price hike, according to Komaidi, would cause an increase of 1.07 percent in inflation (if the price increase was Rp1,000 per liter) and an increase of 1.58 percent (if the price increase was Rp1,500 per liter). Premium consumption cuts in Java and Bali will only raise inflation by 0.64 percent and diesel by 0.88 percent. Yet, according to Komaidi, an oil price hike would be a more simple policy because there was no need to prepare infrastructures and had no significant social impacts. The social impact that he meant here was a condition where people wanted to buy pertamax oil but it was not yet available at filling stations. Besides, private cars where gas converters had been installed needed adjustment by the automotive industry because insurance firms were not willing to insure machines with gas converters. Private cars with gas converters should also be parked in an open place. "These matters will need a long preparation. Pakistan for example had to prepare 4,000 training at the early stage of its fuel-to-gas conversion program. It could only produce 450 thousands cars with converters per year. So, if the government plans to produce 1.2 million vehicles with converters per year, it must be a very optimistic plan," Komaid said. He said that there were several countries which had implemented fuel-to-gas conversion, namely Pakistan, Argentina, Braizil and India. "After all, based on assessment, raising the premium price has no correlation with inflation. Unlike diesel oil which has positive correlation with inflation. This is because so far, those who enjoy premium subsidy are rich people or about 52 percent," Komaidi said. Thus, raising the fuel oil price is more advantageous. After all, according to Nugroho, if the price of subsidized "premium" gasoline was maintained at the current price of R4,500 per liter for public transport and motorcycles while private cars are only allowed to buy non-subsidized gasoline at a far higher price, it would provide an opportunity for speculators to take benefit illegally out of the price disparity. Speculators might buy premium in a large quantity at gasoline pump stations and later retail it at Rp6,000 per liter to private car owners to get a profit. Nugroho said he believed many private car owners would take it rather than buy non-subsidized gasoline at pump stations at a far higher price. The economic lecturer said raising the gasoline price to Rp6,000 per liter would still be acceptable as the present price has remained at the level for years. He said motorists have also enjoyed economic growth in the past few years. |
Jumat, 27 Januari 2012
OBSERVERS OPT TO OIL PRICE HIKES
Selasa, 17 Januari 2012
FUEL CONSUMPTION CUT TO BOOST MOTORCYCLISTS' NUMBER
| by Andi Abdussalam |
Jakarta, Jan 17 (ANTARA) - The government's plan to limit the use of subsidized fuel oils beginning April 1, 2012 will raise motorcycle sales at home, thereby adversely increasing subsidized fuel consumption by motorcyclists. This is because, as many have predicted, low-income car owners will likely turn to motorcycles, raising the consumption of premium gasoline which is subsidized by the government. In addition, the relatively affluent car owners will also likely turn to gasoline sold by efficient foreign oil firms. "The policy will boost motorcycle business and raise its sales by about 5 to 10 percent," Senior Sales Manager of PT Astra Honda Motor (AHM) Sigit Kumala said. He said that motorcycles would become alternative transportation means for the people amid the bad condition of the country's public transportation facilities, particularly in big cities. The government is planning to limit subsidized fuel consumption as of April 1, 2012. Under the new policy, private cars would not be allowed to use subsidized premium gasoline which would only be allocated for public transport and motorcycles. Private cars will then use non-subsidized pertamax gasoline whose price is about two times higher than premium gasoline. Subsidized premium gasoline is sold at Rp4,500 per liter while pertamax plus 95 is Rp8,850 per liter and pertamax 92 Rp8,600 per liter. Through the program the government hopes to save 6.21 million kiloliters of premium gasoline so that the premium gasoline quota set in the 2012 state budget at 37.5 million kiloliters would be achieved. However, the policy will likely boost motorcycle sales and increase their consumption of subsidized gasoline. Sigit said his company predicted that motorcycle sales would reach 8.4 to 8.6 million units in 2012 or up from 8.043 million units in 2011. Director of Public Policy Study Center Sofyano Zakaria shared Sigit's view saying that the government's new plan would increase the number of motorcyclists. "The government should pay attention to the significant increase in the number of motorcycles in Indonesia," Sofyano Zakaria said. The increase in the number motorcycles would in turn increase their fuel oil consumption. Data showed that in 2009 there were 52.4 million motorcycles in the country. This number rose to 80 million in 2011. If one motorcycle consumes one litter of premium gasoline per day this will mean that they will spend some 80 thousand kiloliters per day or about 28.8 million kiloliters per annum. So, if they take two liters per day, for example, a total of 57.6 million kiloliters must be made available for them. This calculation does not yet include the estimated increase in number of motorcycles by about 5 to 10 percent in 2012. Taking the figure of 52.4 million motorcycles in 2009, Sofyano Zakaria said: "If the subsidy of each liter of premium gasoline is Rp3,000, these motorcycles will need a total subsidy of Rp56.492 trillion per annum." "If the government keeps on turning a blind eye to the increasing number of motorcycles and continues to be allow them to use subsidized gasoline, then we need to question its attitude," he said adding that the government should better increase the price of the fuel. After all, the government itself still seems to have doubts about the success of its plan to reduce subsidized fuel oils consumption. It has expressed pessimism that the 2012 subsidized fuel limitation program will achieve the target of lowering subsidized premium gasoline consumption by 6.21 million kiloliters. "It will be good if we can achieve 50 percent of the target of lowering subsidized premium gasoline by 6.21 million kiloliters. But we will make a constant effort to achieve 100 percent of the target," Energy and Mineral Resources Minister Jero Wacik said at a working meeting with the House of Representatives (DPR)'s Commission VII here on Monday. He said the implementation of the program would face many obstacles so that the target would be difficult to achieve. The target included reduction of subsidized premium gasoline consumption by 5.8 million kiloliters for private four-wheeled vehicles in Java and Bali starting April 1, 2012. In the meantime, legislator Bambang Wuryanto of the Indonesian Democratic Party of Struggle (PDIP) faction said that the government policy would only benefit foreign oil companies. "The policy will only benefit foreign oil companies and conversion kit importers," Bambang Wuryanto, said on Monday. The policy would no doubt harm the interests of the community, gasoline station owners and state oil and gas company Pertamina, he said. If subsidized premium gasoline consumption was limited and the public switched to non-subsidized pertamax gasoline, Pertamina must compete with foreign oil companies which sold pertamax at lower price, he said. Therefore, PT Pertamina asked the government to issue a policy to protect its non-subsidized pertamax gasoline product. Pertamina's president director Karen Agustiawan said the protection was needed as a form of the government's solidarity with the state-owned company. "The governments of other countries also do it," she said. She said the government must require private companies selling products equal to pertamax to buy from Pertamina. Only after Pertamina's supply runs out could they be allowed to buy or import from other parties, she said. Another form of protection needed, she said, was setting the selling price of pertamax produced by Pertamina at a lower level than of other sellers. |