NO FUEL OIL PRICE HIKES BUT TIGHT CONTROL ON CONSUMPTION

By Andi Abdussalam

Jakarta, Sept 18 (ANTARA)  - The government is unlikely to raise fuel oil prices in 2012 but will tightly control subsidized fuel oil consumption through an arrangement so that it will not exceed the quota set at 40 million kiloliters.          Chief Economic Minister Hatta Rajasa said the government had no plan to raise fuel oil prices in 2012 on consideration of possible adverse fiscal and macro impacts as well of impact on the real sector.          "We are almost always not able to make an increase rate which matches prediction on how far it will have impacts on inflation, people's purchasing power and wave inflation," Hatta said.          So, the government will not be in a hurry to make a decision on fuel oil price hikes, he said.          Yet, the government will implement control program on subsidized fuel oil consumption so that it would not exceed the set target and put further burden on the state budget.          Therefore, the government will soon implement a policy on the arrangement of subsidized fuel oil consumption, according to Hatta.          "The policy on the arrangement must be implemented so that the quota of subsidized fuel oils set at 40 million kiloliters for 2012 would (not be exceeded) be achieved," the minister told a hearing with the House Commission VII on energy and mineral resources this week.          The House of Representatives (DPR) and the government have agreed to set the quota of subsidized fuel oils for 2012 at 40 million kiloliters.           Hatta said the government was prepared to meet the quota of subsidized fuel oils at 40 million kiloliters for 2012 by implementing a control program. It would involve regional governments to ensure that fuel oil consumption next year would accord with the quota.          Dito Ganinduto of the Golkar faction asked the government to meet the quota of subsidized fuel oils at 40 million kiloliters consistently.          "We don't want to see any further increase in the quota of subsidized fuels in the revised state budget as what happened in the previous years," he said.          Regarding the subsidized fuel oil quota in 2011, Sohibul Iman of the Prosperous Justice Party (PKS) faction said that additional quota had caused an increased subsidy that had to be borne by the state budget.          He said that the initial quota of 38.5 million kiloliters or equivalent to Rp95.9 trillion had been raised in the 2011 revised budget to 40.5 kiloliters, or equivalent to Rp117 trillion, yet now it was further raised to 41.8 million kiloliters. This would put further burden on the state budget.          Sohibul said that actually the allocation of subsidized fuel oils so far had missed the target so that the government should implement a more strategic policy.          "We all agree that the allocation of subsidized fuel oils is missing its target because the poor segment of society enjoys less of the subsidy," he said.          Therefore, Sohibul suggested that the government take more strategic steps in overcoming the subsidy wrong target and would not put the burden on the state budget.          Earlier, state-owned oil and gas firm Pertamina President Director Karen Agustiawan said Pertamina had predicted subsidized fuel oil consumption this year would exceed the quota set in the revised budget. This was due to consumption increase in line with the average increase in vehicles by about 14.73 percent per annum.          For 2012, Pertamina has also previously predicted fuel oil consumption will reach 43.882 million kiloliters if a consumption arrangement policy is not implemented.          The Pertamina prediction is 3.882 million kiloliters or 9.7 percent higher than the government's proposal at 40 million kiloliters in  the 2012 draft state budget.          Of the 43.882 million kiloliters, 26.912 million kiloliters of premium gasoline, 15.27 million kiloliters of diesel oil and 1.7 million kiloliters of kerosene.          Yet, in a working meeting this week, the government and the House Commission VII on energy affairs agreed the quota of 40 million kiloliters as set in draft 2012 state budget.          Hatta said that the government was convinced it was able to maintain the 2012 quota, by implementing a consumption controlling program.          The fact that the quota for subsidized fuels in 2011 had to be increased was because there was no consumption arrangement.          "Therefore we are optimistic that the amount of quota that we have agreed for 2012 would be reached, namely 40 million kiloliters in accordance with the financial notes. The amount could be maintained as far as subsidized fuel consumption is arranged through a policy," the minister said.          After all, he said, the increasing number of vehicles and the economic growth have also been taken into account when the 40 million kiloliters figure was set.***5*** (T.A014/A/H-NG/11:10/B003) 18-09-2011 12:57: