TIME STILL NEEDED TO CUT SUBSIDIZED GASOLINE CONSUMPTION

By Andi Abdussalam

Jakarta, Dec 11 (ANTARA) - With three weeks remaining, the government's plan to limit subsidized fuel oil consumption as of January 2011 seems unlikely to be implemented soon as it is still facing many constraints such as the lack of infrastructure support.          "It is still difficult for the government to limit subsidized fuel oil consumption beginning on January 1, 2011 because not all the needed infrastructure facilities have been prepared," Komaidi, director of ReforMiner energy research organization, said in a discussion on fuel oil consumption restriction on Saturday.          Komaidi explained that of the 600 fuel oil refilling stations (SPBU) in Jakarta and its buffer towns of Bogor, Depok, Tangerang and Bekasi (Jabodetabek), only about 66.67 percent were now ready to sell pertamax fuel oil, particularly if subsidized premium gasoline consumption was already limited.          According to Komaid, of the 2,800 SPBUs in Java and Bali, only about 35 percent were ready.  In order to carry out subsidized fuel oil consumption limitation, the government needed to prepare adjusted dispensers.          Based on a prediction of the Downstream Oil and Gas Regulating Agency (BPH Migas), the government would need about six months to one year to build dispenser infrastructure at 200 SPBUs to enable them to sell Pertamax.          "The provision and installation of the  dispensers will also require an investment," he said.          Latif Adam of the Indonesian Institute of Sciences (LIPI) also agreed that the government was not yet ready to carry out the fuel consumption limitation policy in January. If the policy was imposed,  many private car owners would have to leave their cars at home and use public transport to reach their destinations  whereas no preparations had been made to accommodate this switch.          Latif Adam suggested that the government should impose a tight supervision if it carries out its policy on the limitation of subsidized fuel oil consumption. "This is because it is not impossible that a black market will come into existence  as a result of wide price disparities," he said.          After all, if the government pushes through its plan to limit subsidized fuel oil consumption next January 1,  it will have to import Pertamax, the unsubsidized fuel oil type, to  meet motorists' need nation-wide.          The imports would be imperative because state oil company Pertamina's production of Pertamax was only 200,000 kiloliters per day which would be far from enough to meet the highly increased domestic need, Komaidi said.          The limitation of subsidized fuel oil use would force most motorists to switch from premium to the unsubsidized fuel oil type, Pertamax, and demand for this fuel would automatically soar to an as yet unknown level, he said.          Energy and Mineral Resources Minister Darwin Saleh said last week the government would go ahead with the plan beginning in January 2011. By imposing the policy, the government expects to save as much as 14.613 million kiloliters of fuel oil, so that the subsidized fuel oil quota set at 38.591 million kiloliters in the 2011 budget would drop to only 23.977 kiloliters.          The government would launch the program first in Jakarta and its satellite towns of Bogor, Depok, Tangerang and Bekasi to economize up to 500,000 kiloliters a year. The program will be expanded to cover Java and Bali as of July 1, 2011 to economize up to four million kiloliters in 2011.          In 2012 it would be expanded to cover Sumatra and Kalimantan and in 2013 to Sulawesi. Pertamina estimated the implementation of the program across Indonesia would economize up to 14.613 million kiloliters consisting of premium gasoline 11.026 million kiloliters and diesel oil 3.586 million kiloliters.          So, the subsidized fuel oil quota set at 38.591 million kiloliters for the 2011 budget would drop to only 23.977 million kiloliters.          However its implementation still face constraints, not only in terms of infrastructure but also of social risks.           The Indonesian Consumers Institute Foundation (YLKI) said the government's plan can create high social, economic and transportation risks. "The government had better not impose limitation of subsidized oil consumption  but raise fuel oil prices to cut subsidy," Tulus Abadi of YLKI said meanwile.           He said that the government had better raise fuel oil prices to reduce subsidy rather than offering options on the limitation of consumption. "In practice, it would be just the same." he said.          By raising the price by Rp300 per litter the government would be able to calculate the difference of subsidy value for save on the budget, he said.          Deputy chairman of the DPR's Commission VII on energy affairs Effendi Simbolon shared the need to raise oil price rather than limiting consumption. He said that the government's plan to limit the fuel oil consumption was the same as raising prices.          "Instead of reducing subsidized fuel oil consumption it would be better for the government to raise its price by Rp300 per liter until it reaches its economic viability level," he said.          He said that the government's plan to limit the consumption of subsidized oil was still in the form of an informal proposal because the government had yet to submit its formal proposal.          The Indonesian Democratic Party of Struggle Faction (FPDIP), he said, did not agree with the government's plan to limit the fuel oil consumption. He said that the plan was just the same as diverting the people's consumption of premium gasoline to Pertamax.          He said that if the government raised the price of premium gasoline by Rp300 per liter, consumers would still have alternatives to using other types of fuel oils.         "If the limitation policy is imposed the people would have no choice (other than switching to Pertamax," he said.***2*** (T.A014/A/HAJM/19:45/H-YH) 11-12-2010 20:10:4