Johannes Nugroho – The government is moving steadily toward a sizeable reduction in fuel subsidies, arguing that budgetary discipline mandates it. The Ministry of Energy is aiming for a complete dismantling of subsidies by 2014 through a series of gradual measures.

Such measures are set to start as early as the end of this year by cutting subsidies to private motorists and restricting them to just the mass transportation sector. Yet the policy is bound to be difficult to implement as it is fraught with logistical and emotional booby traps.

On the one hand, citing a staggering figure of almost Rp 90 trillion ($9.9 billion) spent on fuel subsidies for 2010, the government says their abolition is essential to a healthy state budget.

While a pertinent point, the government must also bear in mind that the fact it has had to subsidize fuel is because of miserable spending on public transportation.

Most mass transportation – especially land transportation, including the humble angkot – is run by the private sector, with the exception of PT KA train services and the sea carrier PT Pelni.

As a result of neglect, the state and quality of mass transportation is abysmal. Angkots, whose drivers are under constant pressure to meet their daily quota, cram in passengers without regard to safety or comfort. Muggings are common on both angkots and buses.

To make matters worse, angkots and buses are not part of an integrated system, which means commuters have to pay separate fares when they change vehicles.

In the end, our disorganized and high-cost transportation system encourages the sales of motorbikes, which grow at 9 percent a year, increasing fuel subsidies even further.

Yet if the subsidies are scrapped, ordinary motorists face paying an extra 45 percent for gasoline. This is unpalatable when public transportation is so bad.

Logistically, the government's immediate plan to provide subsidized fuel only to yellow-plate or licensed mass transportation also looks ominous.

The common wisdom is that such public-spirited limitations almost never work in this country.

The government's kerosene-to-LPG conversion program for home cooking is a clear example of an initiative gone wrong.

The 3-kilogram gas cylinders, provided at a 25 percent discount compared with the 12- kilogram cylinders, are meant for use by low-income families only.

But in practice there is so much abuse of the subsidized scheme that it is doubtful it benefits the poor at all. The spate of gas cylinder explosions around the country is testimony to the extent of abuse.

Coveting the 25 percent price difference, local businesspeople have been transferring the gas from 3-kilogram cylinders to 12-kilogram ones, selling the latter at the unsubsidized price.

So, in this case, the subsidy only benefits these illegal dealers, and their bulk buying of the 3-kilogram cylinders often means the needy find it difficult to obtain them, forcing them to revert to their kerosene cookers.

In a similar vein, if the government did limit subsidized Premium fuel to mass transportation vehicles and motorbikes, would it really be far-fetched to assume that similar abuses would take place?

Owners of mass transportation and motorbikes may end up moonlighting as illegal hoarders and sellers of subsidized fuel. They could spend the whole day filling up their tanks from one station to another, only to drain the gasoline and sell it later at a price lower than the unsubsidized Pertamax.

Any gas price rise also has the potential to bring overnight inflation. Due to a lack of infrastructure, the economy is more dependent on cheap fuel than it would be if our roads, bridges and other modes of transportation were in better shape.

Fresh produce providers and small industry depend on private carriers for distribution, and these independent freighters would certainly be affected by an end to subsidized fuel.

The abolition of fuel subsidies does indeed make sense in the long term. However, certain conditions must be met if the initiative is not to turn into another fiasco, similar to what we have seen with other government programs.

So far the government has not explained sufficiently what it plans to do with the savings that would flow from dropping subsidies. The question is whether the funds would be diverted to developing our transportation system and infrastructure.

The figure in question represents almost 10 percent of the state budget, and if spent in these areas would go a long way toward rectifying the government's previous neglect.

[Johannes Nugroho is a writer based in Surabaya.]