SUBSIDIZED FUEL QUOTA MAY BE RAISED TO 44 MLN KILOLITRES

By Andi Abdussalam

Jakarta, Sept 7 (ANTARA) - The number of vehicles in Indonesia has increased by 8 percent or about 800,000, boosting yearly fuel oil consumption to about 60-66 million kilolitres, of which about 64 percent has to be subsidized.          In the 2012 revised state budget, fuel oil subsidies were set at 40 million kilolitres (worth Rp137.5 trillion). However, as of the end of August, about 29.32 million kilolitres of the subsidized fuels have been already consumed.          The government has predicted that by the end of the year subsidized fuel consumption will reach 45-46 million kilolitres, exceeding the amount set in the revised state budget.          Therefore, the government is making a proposal to the House of Representatives for an additional subsidy of 4 million kilolitres of fuel, worth Rp12 trillion. It will also launch a consumption efficiency programme to cover the shortage of 2 million kilolitres.          According to Bambang Brodjonegoro, the head of the finance ministry's fiscal policy agency (BKF), the government's plan to raise the quota of subsidized fuel oil by 4 million kilolitres will increase the fiscal burden by Rp12 trillion.          "It will be around Rp12 trillion. Every increase of 1 million kilolitres will raise the budget by Rp3 trillion," he stated here on Thursday.          "The government had predicted that the demand for subsidized fuel oils would exceed the quota and it had therefore estimated the extra fiscal burden on the state budget by taking into account the exchange rate, Indonesian Crude Price (ICP) and volume of subsidized fuel oils,¿ Bambang said.          "What is important is that the deficit will not exceed 2.3 percent even in the worst-case scenario," he added.          Earlier, Deputy Minister of Energy and Mineral Resources Rudi Rubiandini stated that subsidized fuel consumption would exceed the targeted quota of 40 million kilolitres. By the end of the first half of the year, subsidized fuel consumption reached 21.6 million kilolitres.          "If this figure is multiplied by two for the rest of the year, it would reach 43.2 million kilolitres. In addition, there is an increase in the number of motor vehicles and cars," he pointed out.         According to the latest data from state-owned oil and gas firm Pertamina, as of the end of August, the total distribution of subsidized fuel has reached 29.32 million kilolitres, including 18.44 million kilolitres of Premium gasoline, 10.06 million kilolitres of diesel oil, and 700,000 kilolitres of kerosene.          In the worst-case scenario, Rudi said, subsidized fuel consumption would reach 45 million kilolitres, forcing the government to bear an additional burden of 5 million kilolitres.          "If the prediction of 44-45 million kilolitres is correct, the burden will increase by 5 million kilolitres. This is without factoring in possible oil price hikes in the future," he added.          Therefore, the government has made a proposal to the House of Representatives for an additional subsidy of 4 million kilolitres of fuel. With the addition of 4 million kilolitres, the total quota of subsidized fuel oil will reach 44 million kilolitres.          "If the use of subsidized fuel oils at ministries and institutes is not controlled, the quota may even reach 46 million kilolitres," Rudi warned.          Therefore, the government will launch a consumption efficiency programme in its efforts to save about 2 million kilolitres of subsidized fuel in 2012.       "Without it, consumption will reach 46 million kilolitres. We can cut the predicted consumption to 44 million only with the launch of the efficiency programme," Rudi said in Hamburg earlier this month.          He noted that the government had banned government vehicles in Jakarta and its satellite towns of Bogor, Depok, Tangerang and Bekasi from using subsidized fuels since June 1, 2012, ¿Other areas in Java and Bali were also included since August 1, 2012," Rudi said.          Vehicles belonging to mining and plantation firms have also been prohibited from using subsidized diesel oil with effect from September 1, 2012.          Meanwhile, as part of the efficiency programme, the Downstream Oil and Gas Regulator BPH Migas will issue a regulation on subsidized fuel quota for cars.          "As per our plan, car owners would be allowed to buy only up to 10 litres of subsidized premium gasoline or diesel oil per day from refuelling stations," the Fuel Oil and Gas Affairs Director of BPH Migas, Djoko Siswanto, said.          The regulation is aimed at curbing the consumption of subsidized gasoline and diesel oil. Domestic sales of subsidized gasoline and diesel oils are expected to exceed the quota set in the state budget.          "The quota system will be announced soon - first in Jakarta and then in other regions. The implementation of the regulation is pressing in Jakarta, as the subsidized gasoline quota for the city is expected to be exhausted by mid-September,¿ Djoko explained.          He said BPH Migas would also ban luxurious cars from using subsidized fuels. "Car categorisation would be done on the basis of engine capacity, year of production, price," he added.          If the House of Representatives rejects the government¿s proposal for an additional subsidy of 4 million kilolitres of fuel, the government will have to implement a plan to reduce kerosene quota in order to pay for the additional gasoline and diesel fuels.          Evita Legowo, the general director of Oil and Gas at the Energy and Mineral Resources Ministry, said the conversion of quotas would be implemented to ensure a regulated supply of fuel oil for the country's citizens.         "However, the Ministry is optimistic that the parliament will agree to raise the quota, so we actually won¿t need do the conversion. We will see what the parliament members have to say on Monday," she stated.         The consumption of subsidized gasoline and diesel fuel in Indonesia is expected to surpass the designated quota, while the consumption of kerosene has been far less than the quota set in the 2012 revised state budget.        "Therefore, the kerosene-to-gasoline conversion needs to be implemented," Legowo noted.***2*** (T.A014/INE/KR-BSR/A/A014) 07-09-2012 18: