"The increase of Rp500 is pretty small and less painful."Jakarta (ANTARA News) - The Finance Ministry has proposed three options to curb fuel subsidies and strengthen the state budget next year.
The first option is raising the price of subsidized premium gasoline and diesel oil by Rp500 a liter which is expected to reduce fuel subsidies by Rp21.2 trillion, the acting chief of the ministry`s fiscal policy board, Bambang Brodjonegoro, said here on Tuesday.
"The increase of Rp500 is pretty small and less painful because it will have a lower impact on the inflation rate," he said.
The second option is encouraging all public transport and cargo vehicles to switch to gas, which is expected to reduce fuel subsidies by Rp3.9 trillion in Java and Bali or Rp6.6 trillion nationwide, he said.
The third option is banning private cars from using subsidized fuels, he said, adding this option will enable the country to cut fuel subsidies by Rp29.6 trillion in Java and Bali or Rp50.2 trillion across the country.
"Ideally, the three options can work altogether," he said.
In addition, the other strategy that the country can pursue the efficient use of subsidies is converting fuel oil to gas, introducing non-fuel oil as alternative energy, encouraging the production of environmentally friendly cars and hedging oil prices, he said.
According to Bambang, the efforts must be made because the granting of fuel subsidies had so far missed the target, leading to disparities in the allocation of fuel subsidies.
"The higher amount of fuel subsidies will reduce an opportunity to direct the state spending to more productive and quality activities and cause difficulties to control fuel consumption. As a result, oil deposits will be quickly depleted," he said.
The large fuel subsidies will not benefit the government because they will cause state spending to increase, he said.
(Uu.S012/B003)
Editor: Priyambodo RH
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