Arientha Primanita – The government on Thursday postponed a planned restriction on certain types of private vehicles from purchasing subsidized fuel as international oil prices decline.
Energy and Mineral Resources Minister Jero Wacik said he and Coordinating Minister for the Economy Hatta Rajasa had consulted with President Susilo Bambang Yudhoyono about the decision.
"For the time being, [the restriction] is postponed until we find the best formula," Jero said in a statement on Thursday.
The government had planned to limit the use of subsidized fuel to private vehicles with engines smaller than 1,500 cubic centimeters, starting this month. Jero provided no details about the fate of an additional planned restriction on subsidized fuel use by government-owned vehicles.
The House of Representatives in March rejected an initial government proposal for a 33 percent increase in the subsidized fuel price to Rp 6,000 (65 cents) a liter, from the current Rp 4,500.
Instead, lawmakers agreed to allow the price increase only in the event that the six-month average Indonesian crude price exceeded the state budget assumption – $105 a barrel – by 15 percent, which would mean an average price of $120.75 a barrel.
The ICP slipped to $124.63 in April, data from the Energy and Mineral Resources Ministry showed on Wednesday, which means the average is just shy of the threshold set in the revised 2012 state budget that would trigger the fuel price increase.
"The ICP could still fall another 1.5 percent to $122.90 in May with the six-month average remaining below the threshold," Nomura Securities said in a report on Wednesday.
The energy minister said restricting private vehicles also posed a massive logistical challenge, requiring staff at gas stations to screen eligible vehicles. "To tell you the truth, we have tested [the scheme] in the field, and it is too hard to implement," Jero said.
Jero said the government would instead limit the number of gas stations selling subsidized fuel, focusing its availability on underdeveloped areas. "We will do this until we find the right formula [for restricting subsidized fuel use]," he said.
The government has allocated Rp 137.4 trillion for fuel subsidies this year, enough to pay for 40 million kiloliters. The government has estimated that without restrictions, subsidized fuel consumption could top 47 million kiloliters.