the planned limitation of subsidized fuel consumption would be based upon the engine capacity of private cars, though not all private autos would be subjected to the policy, Evita Legowo said.
Jakarta (ANTARA News) - The government looks set to continue its plan to limit the use of subsidized fuels by private cars after it failed to obtain support from the House of Representatives (DPR) late last month to raise the prices of subsidized fuels.

The plan seeks to keep subsidized fuel consumption equal to the quota of 40 million kiloliters set in the revised 2012 state budget.

The Director General of Oil and Gas at the Energy and Mineral Resources Ministry, Evita Legowo, said on Wednesday that the planned limitation of subsidized fuel consumption would be based upon the engine capacity of private cars, though not all private autos would be subjected to the policy.

"The policy will be started in Java and Bali where infrastructures are ready," she said.

Currently, private cars consume more subsidized premium gasoline than any other cars in the country, reaching about 53 percent of the total consumption.

Evita feared if subsidized fuel consumption was not controlled it would soar to 46-47 million kiloliters from the assumed consumption of 40 million kiloliters in the state budget.

However, the policy will not apply to motorcycles, where there are tens of millions across the country.

Also, the energy and mineral resources minister would soon issue a regulation to serve as a legal basis for the limitation of subsidized fuel consumption, she said, adding, "We hope the regulation would be issued in April or early May 2012."

The regulation will be a follow-up to Presidential Regulation No. 15 of 2012 on retail prices and consumers of certain fuels. President Susilo Bambang Yudhoyono signed the regulation on February 7, 2012.

Officials from state oil and gas company Pertamina said on Wednesday that the company needs time to implement the policy.

"If the regulation is to be issued in May, it will take us two to three months to make preparations. So, it could only be implemented starting in July or August 2012," Mochamad Harun, Pertamina`s vice president for corporate communications, said.

Since the government, for the first time, introduced the plan, Pertamina has been waiting for the issuance of the regulation, he said. "Based upon the regulation, Pertamina will prepare what needs to be raised, be it investment or others."

He further said Pertamina had prepared tanks for non-subsidized pertamax gasoline at its fuel depots. "But because the plan has been put on hold, we will now fill them with premium gasoline," he said.

With the number of motorcycles and cars continually growing, subsidized fuel consumption this year is likely to exceed the quota of 40 million kiloliters.

Harun said in Amlapura, Bali, on Wednesday that the nation`s subsidized fuel oil quota of 40 million kiloliters for 2012 will only be enough to meet consumption until the third week of October.

"The national quota of subsidized fuel oils for 2012 has fallen to 40 million kiloliters from more than 41 million kiloliters last year.

If subsidized fuel consumption continues to increase, the government-set quota of 40 million kiloliters will fall short of needs until the end of this year," he said.

Just in the first quarter of 2012, subsidized fuel consumption nationwide reached 10.7 million kiloliters, he added.

Normally, fuel oil consumption begins to increase in the second quarter when manufacturing industries, government projects and tourism increases significantly, he said.

"If the quota of subsidized fuel oils is not to be raised while consumption remains high, we predict it will be enough until the third quarter of 2012," he said.

To anticipate the possibility of the quota falling short of the nation`s needs, the government must increase the quota by 7 million kiloliters to 47 million kiloliters, he said.

"Pertamina expects the House of Representatives and the government will increase the quota of subsidized fuel oils so it will not run out before the end of this year. We have warned the government on the matter," he said.

A rise in the quota of subsidized fuels means that the government must allocate extra funds for fuel subsidies, which will eventually add to the burden of the state budget.

Under the revised 2012 state budget, the government is allowed to raise the prices of subsidized fuels if the Indonesia Crude Price (ICP) is 15 percent higher than the assumed price in the state budget during a six month period.

Finance Minister Agus Martowardojo said early this month fuel subsidies would increase by a range of Rp4 trillion to Rp5 trillion per month if the subsidized fuel price is not raised this year.

Therefore, the use of subsidized fuel should not miss the target and the diversification of energy should be encouraged in order to retain the fuel subsidy target of Rp137.4 trillion in the revised 2012 state budget, he said.

"We will safeguard and control the use of subsidized fuel so that it`s used in an orderly manner. We will also try to restrict and control the use of subsidized fuel and encourage the use of alternative energy," he said.

If the fuel subsidy needed to be increased, the government would use Rp30.6 trillion in funds originally planned for compensation for the poor in the event of the fuel price hike, he added.

"If the fuel price is not raised, we can reallocate the compensation fund, amounting to Rp30.6 trillion (for fuel subsidy)," he noted.

He also said that if the price of subsidized fuel is not raised, subsidized fuel consumption might exceed the quota of 40 million kiloliters, as a result of illegal hoarding and smuggling.

"We ask 520 regional governments (across the country) to make the effort to prevent people from hoarding and smuggling fuel. We must uphold the law," he said.

However, if the use of subsidized fuel cannot be controlled, global crude prices continue to increase, and budget allocations for fuel subsidies exceed the target, then the government is likely to submit another draft revision of the 2012 state budget to the House of Representatives, he said.(*)

Reporter: By Suharto
Editor: Heru Purwanto
Copyright © ANTARA 2012