The 2012 State Budget Law has banned fuel price increases and only mandated restrictions on the use of subsidized premium gasoline in Java-Bali beginning April 1, 2012.
Jakarta (ANTARA News) - The Indonesian government does not need to conduct further studies prior to raising the retail price of premium brand gasoline, according to an energy observer.

"It is certain that the impact on the fuel policy by lowering the gasoline subsidy budget in a short time will be a retail price hike," said Energy observer Kurtubi here Thursday.

According to Kurtubi, the Director of the Center for Petroleum and Energy Economics Studies (CPEES), the government and parliament can revise Law No. 22 Year 2011 regarding the state budget through the acceleration of the 2012 Budget Amendment discussion, which he said is a legal umbrella to raise fuel prices.

The 2012 State Budget Law has banned fuel price increases and only mandated restrictions on the use of subsidized premium gasoline in Java-Bali beginning April 1, 2012.

"The fuel price hike should be done during a period of low inflation," said Kurtubi.

Another energy observer from the ReforMiner Institute, Komaidi Notonegoro, also said that the government does not need to order a study, because an earlier study had been performed.

"There`s no more study needed, we settled it all last year," he said.

Currently, the reduction of the fuel subsidy is only a matter of whether the government has the courage to allow an increase in gasoline prices , he said.

Following a meeting with Energy and Mineral Resources Minister Jero Wacik and the House of Representative (DPR) Commission VII on Monday, Jan 30, Wacik is asking the government to review the option of increasing premium fuel prices by 500-Rp1.500 per liter in 2012.

The House`s Commission VII also asked the government to examine the transfer and conversion of premium to "pertamax" and gasoline to CNG.

The government then plans to appoint a consortium of universities to conduct a study, to be completed by the end of February 2012.

Kurtubi also said that the government`s fuel restriction program, to begin on April 1, 2012, is an incorrect policy.

"Because people are only switching from premium to higher octane pertamax fuel, people are still consuming fossil fuels and this will not reduce dependence on fuel imports in the middle of a period in which there is limited crude production and the domestic price is high," Kurtubi said.

Further, he warned, the restrictions require expensive oversight, are the equivalent to a price increase and violate the Constitutional Court, which prohibited setting market prices for fuel.

Meanwhile, to reduce fuel subsidies in the medium and long term, the government must convert to gas fuel by now preparing the infrastructure.

"I am convinced if the government really means it, then we will see the conversion result within two years," Kurtubi said.

Further, switching from premium to pertamax for private cars would be too expensive and does not satisfy the sense of justice, he noted.

Also, he said it is a complex matter to convert autos from fuel to CNG.(*)

Editor: Heru Purwanto
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