GOVT TO LIMIT CONSUMPTION OF SUBSIDIZED FUELS IN 2012

By Andi Abdussalam

Jakarta, Dec 23 (ANTARA) - After  several delays, the government is now determined to carry out its policy to limit  consumption of subsidized fuel oil next year in an effort to reduce subsidies that have so far burdened the state budget.           Energy and Mineral Resources Deputy Minister Widjajono  Partowidagdo said the policy would first be implemented in Jakarta and then be continued in the capital's buffer towns of Bogor, Depok, Tangerang and Bekasi.          "After that we will continue the implementation of the policy in West Java, Java and Bali," Widjajono said. He said that up to 2015,  the subsidized premium gasoline and  diesel oil consumption limitation measures would have covered  all private vehicles in Indonesia.          Thus, later on, the government will only provide fuel subsidies for public transportation vehicles and motorcycles. "This program will reduce subsidies significantly," he said.           Oil and Gas Director General Evita Legowo said the government was now in the process of revising Presidential Regulation No. 55 / 2005 and Presidential Regulation No. 9 / 2006, which regulated parties who had the rights to consume subsidized fuels.          "We have set the target to revise the presidential regulations at the end of December or in January next year," she said.           Law No. 22 / 2011 on the 2012 state budget regulated that the limitation of subsidized premium gasoline consumption for private cars in Java and Bali should be started on April 1, 2012.          In the law, the fuel oil quota for 2012 was set at 40 million kiloliters with a reduction option of 2.5 million kiloliters through the implementation of the consumption limitation program.          Regarding the government's plan to implement the program, a legislator said that the government had decided to implant the program due to the increasing price of the world crude price. However, the government's step was too reactive to the world crude price hike while when taking polices regarding the matter it did not consider much negative implications,     "The government's reactive options are feared to create negative implications on premium gasoline consumers, refueling premium gasoline stations (SBPUs) and state-owned oil and gas company Pertamina," legislator Bambang Wuryanto, secretary of the Indonesian Democratic Party of Struggle (PDIP) said here on Friday.          Earlier, the government has reacted to the world crude price which rose to US$100 per barrel and caused the country's fuel oils (BBM) subsidy to increase from the estimate of Rp126 trillion to Rp198 trillion in 2012.          Thus, the government is planning to implement its program to cut subsidized premium gasoline consumption. Beginning on April 1, 2012, all private cars are no longer allowed to consume subsidized premium gas but Pertamax ( non-subsidized fuel).          Besides, the government will also replace premium gasoline with gas fuel (BBG) for South Sumatra, Java and Bali regions.          According to Bambang who is also member of the House Commission VII on energy affairs, if the government did carry out its too reactive plans, it meant that it would give a big homework for Pertamina and SBPU owners.          "Pertamina and SBPU owners have to make available pertamax dispensers. About 4,000 SBPUs in the country still have no dispensers. The investment needed for one dispenser is about Rp2 billion, which means that an investment of Rp8 trillion would be needed," he said.          He said that SBPU owners must earmark money for the purchase of dispensers. "It is the SBPU owners who will pay the dispensers. This will clearly put a heavy burden of small SPBU owners," he added.           Yet, a Pertamina official said that more than 2.7 thousand refueling stations have now ready to implement the program.           A total of 2,704 gasoline refueling stations  are now ready to implement the government's program to cut consumption of subsidized premium gasoline.           Spokesman of state-owned oil and gas firm Pertamina, M Harun said Friday with  2,704 SPBUs now ready to execute the subsidized premium consumption reduction program,  the target of having 2,500 such stations at the end of 2011 was considerably surpassed. "The 2,704 SBPUs are now ready to sell pertamax," he said.          According to Bambang, there is still other problems, namely the fact that the price of Pertamina's pertamax at SBPUs would not be able to compete with that of foreign SPBUs like that of Shell, Petronas and others.          "This could be concluded that the government policy will benefit foreign SBPUs while ruining those of Pertamina. It will widen the market of foreign SBPUs and narrow the market of Pertamina," he said.          After all, all private cars are required to consume pertamax. Based on a research in Jakarta and in its satellite towns of Bogor, Depok, Tangerang and Bekasi (Jabodetabek), luxury private cars only accounted for 1.4 percent, while those with a price of lower than Rp200 million reached 54 percent.          "This will put a burden on the owners of the private cars because they most likely have no enough savings to purchase pertamax," Bambang said adding that this did not yet include pick up (open box cars) such as those used to transport vegetables or other commodities in traditional markets.          This will also trigger further inflation for basic commodities whose prices have so far been high.      The same thing also true to the government plan to convert the use of premium gasoline to BBG. It is inefficient as dispensers must be made available at every SPBU, converter in every car, supply of BBG to SPBU and the absence of gas supply analysis.         "This means that before implementing its policy, the government should first prepare the needed infrastructures," he said.     (T.A014/A/HAJM/23:00/H-YH) 23-12-2011 23:03: