Indonesia’s Gas Stove Conversion Program Saved Rp 60 Trillion
A government initiative to wean households from kerosene stoves and get them using liquefied petroleum gas has yielded a savings of Rp 61.6 trillion ($6.5 billion), a senior official at state oil and gas company Pertamina said on Sunday.
The program, launched in 2007, provides households with a starter package that includes an LPG stove, a three-kilogram gas canister, a hose to connect the stove to the canister and a standardized gas regulator.
“We are grateful for this achievement,” said Hanung Budya, director of marketing and trade at Pertamina, which administers the program.
In five years, Pertamina has distributed 53.9 million gas stove packages to households in 23 provinces, he said. The program has saved 27.1 million kiloliters of more expensive kerosene and boosted LPG use by 9.9 million metric tons.
This year, Pertamina aims to distribute 2.3 million more packages across five provinces: West Sumatra, Bangka-Belitung, Central Kalimantan, Central Sulawesi and Southeast Sulawesi. The packages will have a total value of Rp 672 billion. In 2013, Pertamina plans to distribute another 2.36 million packages.
Despite the program’s overall success, it hasn’t always been smooth sailing. A few years into the initiative there was a rash of headlines from across the country about exploding LPG canisters.
The explosions were reportedly caused by faulty regulations and negligence by retailers attempting to illicitly siphon gas from the three-kilogram canisters and put it into unsubsidized 12-kilogram ones.
Several people were killed and injured, and property was destroyed. The government responded by ordering the police to crack down on illegal retailers and distributors and by replacing some of the faulty components blamed for the explosions.
Komaidi Notonegoro, deputy director of the Reforminer Institute, said that despite the problems associated with faulty canisters, the program had generally proven a success.
“We can see that people have adapted and the coverage of this program has reached the entire nation,” he said.
Kodrat Wibowo, an analyst from Padjadjaran University in Bandung, called for a similar large-scale government initiative to convert vehicle users from subsidized Premium gasoline to natural gas.
The government is still looking for ways to reduce its fuel subsidy burden, especially after a plan to increase the retail price of Premium by 33 percent was axed because of opposition and protests across the country.
The government is trying to promote natural gas use to reduce the subsidy burden, but has been constrained by inadequate infrastructure, namely the lack of gas stations equipped to provide the fuel.
Energy subsidies, which include fuel and electricity, will rise to Rp 306 trillion this year, 51 percent more than the government’s initial forecast, according to a document that the Ministry of Finance presented to the House of Representatives on Thursday.
Data from the ministry showed that from January to June this year the government spent Rp 124.4 trillion on energy subsidies, equivalent to 62 percent of its full-year allocation and almost four times the Rp 30.6 trillion set aside for financing infrastructure projects.
Divided by Indonesia’s population of 240 million people, the total subsidy bill comes out to $135 per person.
Southeast Asia’s largest economy heavily subsidizes gasoline, diesel and electricity to shield the country’s poor from the effects of the global slowdown. The World Bank estimates that about half of Indonesia’s 240 million people lives on less than $2 a day.