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More Backpedaling on Indonesia's Plan to Restrict Subsidized Fuel
Arientha Primanita & Kunradus Aliandu | February 02, 2012

A government plan to restrict the use of subsidized fuel might be put on hold because of a public uproar. Fuel subsidies take up a substantial portion of the national budget. (JG Photo/Safir Makki) A government plan to restrict the use of subsidized fuel might be put on hold because of a public uproar. Fuel subsidies take up a substantial portion of the national budget. (JG Photo/Safir Makki)
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DrDez
10:39am Feb 3, 2012

I feel only a minimum increase will be applied (if any) say to 5500. Why? well as we have seen some bugger is able to mobilise mass protests right now and that is a major fear for the administration - a 6500 could just trigger widespread protest and spell the end. I feel there will be no increase in the first half of 2012 - I however support a staged increase, phase it out over say 3 years ending up in 2015 at say 10500 - this can be open, clear and would remove much of the protest impact perhaps.


DrDez
10:33am Feb 3, 2012

Pakguru

I read non essential touring to mean the seemingly endless convoys of motorbike and cars we witness on a daily basis for just about any reason and often over huge distances. Groups who are just saying 'here we are look at us' - this goes for bike groups to the FPI (most of course are unemployed youths which begs the question who is paying?)

This 'touring' is not only costly in fuel but it often blocks roads. A tour often attracts police escorts who seem to enjoy the rewards and of course when ever 2 or more Indonesians gather there is the compulsory mobile eating trolleys adding further to the traffic woes

Interestingly this requires a police permit but as we know permits only apply to certain groups


SirAnthonyKnown-Bender
10:29am Feb 3, 2012

Usual visionary, well-thought-out political planning. About the only thing the Indonesian public expects from its otherwise utterly chuckle-headed leaders is cheap gas. They've long given up expecting any significant infrastructure improvements to emerge into the sunlight after passing through the long dark tunnel of graft. Thus fuel price hikes lead to drop in support for any government, who thus become reluctant to tackle the issue in the first place. Just stick it up to Rp.6000 already and stop farting about. That's an increase of a third and should do for now.

pakGuru
9:23am Feb 3, 2012

@devine

what is nonessential cruising?

anybody who has a car spends an extra hour or more because of traffic. jakarta is not the kind of place that invites 'cruising'

the govt needs to grow some b***s and do something about public transport. i hesitate to call it a system.


devine
6:52am Feb 3, 2012

“Even if it was raised to Rp 7,000 a liter, people would accept that.”

Probably they wont accept but they for sure could afford it. Just cut the nonensential cruising around...

Just hope the Govt is going to spend the saved money wisely...

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The government appears to be edging closer to officially postponing its plan to restrict the use of subsidized fuel and instead raising the price in order to stem the massive cost of the discounted energy scheme.

Energy Minister Jero Wacik said on Thursday that the government was continuing to mull over cutting the level of fuel subsidy, which consumes a substantial chunk of the national budget.

“We have to study it first and establish a decent price increase that will not shock the public,” he said.

Jero said that once the government finished its study, it would submit the result to lawmakers, who will need to approve any decision before it comes into force.

“The faster, the better. There should be a decision before April,” he said, referring to the month from which most private vehicles in Java and Bali were set to be banned from purchasing subsidized fuel.

Former Vice President Jusuf Kalla said he supported the idea of raising the price.

Premium, the subsidized fuel, is sold at Rp 4,500 (50 cents) per liter now, while the higher-octane Pertamax and Pertamax Plus are priced between Rp 8,000 and Rp 9,000 per liter.

“It is hard to control if a restriction is imposed,” Jusuf said on Thursday. He added that raising the price to Rp 6,000 a liter would be the simplest approach. “Even if it was raised to Rp 7,000 a liter, people would accept that.”

Under the existing plan, which has been criticized by legislators and economists, from April 1 only motorcycles and public transportation vehicles in Java and Bali would be allowed to use subsidized fuel.

All other vehicles would have to fill up with higher-octane unsubsidized fuel. The scheme was intended to be rolled out across the entire country over the next few years.

If the government does raise the price of subsidized fuel, Jero said, it might postpone the restriction plan. “The restriction on state-subsidized fuel will not necessarily be implemented on April 1. That is not binding,” he said.

Kalla said problems would remain even if people were ordered to use natural gas. “It is not realistic to convert to using gas,’’ he said, because people would have to buy converter kits.

Pertamina president director Karen Agustiawan said last month that the company would not have enough fueling stations in Java and Bali to meet the increased demand for unsubsidized fuel.

The price of fuel is a sensitive issue. Because it constitutes a large proportion of household budgets, price hikes can lead to social unrest.

Last year, the government spent Rp 165 trillion on fuel subsidies — more than the Rp 127 trillion allotted in the budget.

Lawmakers have said that there are not enough gas stations across the sprawling archipelago that sell the higher quality non-subsidized fuel. “Restricting the use means raising the fuel price,” legislator Effendi Simbolon said last month.