No Decision Yet on Limiting Subsidized Fuel Use

Jakarta, Indonesia (News Today) - Coordinating Minister for Economic Affairs Hatta Radjasa said no decision had yet been made with regard to the idea to limit the use of subsidized fuel oil by certain types of motor vehicles.

"It is not true. There is no decision yet on limiting the use of subsidized fuel by certain types of vehicles," he said at his office here on Monday.

He said the idea was still being studied and inputs from all parties concerned were needed before the plan could be realized.

"All alternatives are still being studied whether it is a smart card system or luxury car category. We cannot just make a decision. Familiarization and views from stakeholders concerned are still needed before a decision can be made," he said.

He said that in principle subsidy must be given correctly to the people who are economically weak and in view of that a credible and correct method is needed to determine it.

He said ideally priority must be given to public transport service and fishermen who need diesel fuel to fish. Hatta said he did not know when the decision on the issue would be made.

"Decision indeed must be made but when it will be let us just wait. We are still exercising," he said.

Minister of energy and mineral resources Darwin Saleh meanwhile said that the reduction of subsidized fuel use would be done based upon consideration on the people’s capacity.

"In principle public transports and the economically-weak group including motor-cyclists will remain to receive a fuel subsidy," he said.

He said the government would focus on reducing use of subsidized fuels by the rich group. According to him, the government was not still studying various options for the purpose such as barring cars produced in 2005 and after or sedans to use subsidized fuels or allowing only cars with yellow license plates to use the subsidized fuels.

Other options include PT Pertamina reducing the dispensers of subsidized fuels and increasing those for non-subsidized fuels at gas stations and requiring stickers from buyers of subsidized fuels and producing fuels with octane levels from 88 to 92. The government expects the study on the policy to finish in June and to be tried in Java in August 2010.

The government in the 2010 revised budget sets the quota for subsidized fuels at 36.5 million kiloliters. Initially the government sets the cost of subsidy for the 2010 budget at Rp68,72 trillion or 1.1 percent of the GDP but later it revised to Rp89.29 trillion or 1.5 percent of the GDP. Based on estimates subsidized fuels consumption in 2010 will swell to reach 40.1 to 40.5 million kiloliters.

"In view of that the use of subsidized fuels is to be cut by up to four million kiloliters," he said.

Source : kompas.com

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