Amahl S. Azwar, Jakarta – Energy and Mineral Resources Minister Jero Wacik revoked the nation's downstream oil and gas regulator BPH Migas' plan to carry out the so-called "No-Premium Day", which had been scheduled for this Sunday.
Speaking before reporters in Jakarta on Tuesday, Jero said the program was canceled due to the potential for social unrest while, at the same time, he admitted it would have little impact on the lowering of consumption of subsidized fuels.
"After some calculations we have decided to cancel the plan as the sum of subsidized fuels that can be saved is rather small, while there [is the threat of] trouble once it is implemented," he said.
Under instructions from BPH Migas, state-owned oil and gas firm PT Pertamina was scheduled to implement the so-called "National Day of Awareness of Subsidized Fuel-Consumption" on Dec. 2.
It had been planned that on that day, all of the gas stations in Java and Bali, as well as other cities including Medan, Batam, Palembang, Balikpapan and Makassar, would not sell subsidized fuels for land transportation use, such as Premium and diesel starting from 6 a.m. to 6 p.m.
The campaign was expected to save as many as 15,000 kiloliters of subsidized fuels, worth Rp 75 billion (US$7.81 million).
The gas stations would supply non-subsidized fuels instead of the heavily subsidized Pertamax, which is sold at around Rp 10,000 per liter. At the price of Rp 4,500 per liter, subsidized fuels in Indonesia are some of the cheapest in Southeast Asia.
Jero, a senior figure in the ruling Democratic Party, who has close ties with President Susilo Bambang Yudhoyono, said the supply of subsidized fuels this year would likely surpass the quota stipulated in the 2012 revised state budget.
"If the supply surpasses the quota then of course we have to increase it in order to ensure that citizens can buy their fuel. I am sure the lawmakers at the House of Representatives will understand," he said.
The government initially assigned funds for 40 million kiloliters of subsidized fuel this year, less than the actual 41.7 million kiloliters consumed in 2011. Fuel consumption in 2011 exceeded the quota of 40.36 million kiloliters in the year's state budget by 3 percent.
In September, House Commission VII overseeing energy approved the government's bid to increase this year's quota for subsidized fuels by around 4 million kiloliters to a total of 44.04 million kiloliters.
However, Pertamina's business and marketing director, Hanung Budya Yuktyanta, said that soaring consumption would likely surpass the revised quota by around 450,000 kiloliters for Premium and 800,000 kiloliters for diesel by the year's end.
In a bid to ensure that subsidized fuel consumption did not exceed the quotas, downstream oil and gas regulator BPH Migas had ordered Pertamina to limit its daily fuel distribution to each city, starting on Nov. 19.
However, the company decided on Monday to end the policy due to the potential for social unrest in cities such as Bengkulu, Lampung, Palangkaraya, Palembang, Pontianak and Surabaya.
"In Kutai Barat, East Kalimantan, there has been a series of social conflicts due to the scarcity of subsidized fuel. That is why we retracted the plan," said Hanung.
Earlier this year, the government proposed increasing the price of subsidized fuel to Rp 6,000 from Rp 4,500 per liter to reduce the amount the government had to spend on subsidies. But the plan was rejected by the House after a series of protests in the capital.
Separately, BPH Migas fuel distribution director Djoko Siswanto said that even though the regulator was "disappointed" with the cancelation, it would continue to call for middle- and middle to upper-class society to limit the consumption of subsidized fuels every Sunday in December to "increase their awareness".