Tito Summa Siahaan – As consumers await a rise in the subsidized fuel price next month, the national government on Friday announced limits in the size of daily purchases in a move seen as a sign of indecisiveness on the issue.
Deputy Minister for Energy and Mineral Resources Susilo Siswoutomo said on Friday that the government planned to cap the daily purchase of subsidized fuel for private vehicles at 3 liters a day.
Susilo said the figure came from the estimated average daily consumption of subsidized fuel by private car owners – around 2.7 liters a day. "[So the cap] will be around 3 liters a day," Susilo said on Friday.
He said the government will cap the purchase as soon as a new IT system to monitor consumption is in place. Susilo said state energy firm Pertamina is currently testing the system, called the Radio Frequency Identification (RFID) system, in several gas stations in Jakarta.
Susilo said the system will be installed in all 5,027 gas stations owned by Pertamina by July. "Then after that, we will start distributing chips to private vehicles, starting from Greater Jakarta area," he added. The minister, however, did not say whether vehicle owners would need to pay for the chip.
Pertamina has allocated at least Rp 800 billion ($82 million) to deploy the system, which is being set up by state-controlled electronics firm Industri Telekomunikasi (INTI). Susilo said the government had no plan to introduce such a system for motorcycle users.
With many motorists at present filling up the tank on a weekly basis, the new policy is likely to prompt a massive rise in the number of times drivers will need to visit fuel stations.
Susilo said the consumption of subsidized fuel by motorcycle was about 0.7 liter a day, meaning that there was little benefit in imposing the cap on motorcyclists.
"Should it be applied, the system will force private car owners to use motorcycles to travel to and from work instead of cars," one Jakarta resident said.
Hari Poernomo, an oil and gas analyst, said the government was wrong in its approach to fuel. "Subsidized fuel is our primary source of energy, so any move to curb its consumption will have an impact on the economy," he said.
He said the government must first find a way to increase revenue in order to cover the cost of subsidized fuel. "The government must double or triple the tax on private vehicles. The tax is currently too low," said Hari, a former director at Pertamina.
Hari said the government should introduce tougher taxes for high-income earners. "Collect more revenue, spend it on infrastructure to stimulate economic growth. Then after the people have better income, raise the price of fuel," Hari said.
In addition to measures to limit consumption, the government plans to raise the price from Rp 4,500 a liter, and has proposed setting the new price at Rp 6,000 per liter.
The government can increase the price without seeking fresh approval from the House of Representatives under the terms of a legislative agreement struck after last year's failed attempt to increase the price, under which a sustained increase in the global price could be passed onto consumers.
Energy and Mineral Resources Minister Jero Wacik, a senior member of the ruling Democratic Party, said the government would provide cash handouts to the poor.
"It will be provided for around five or six months [in an effort] to keep things calm," Jero said on Friday. Hari said political motives were a key factor in the government's decision to provide cash handouts.
The Democratic Party is under pressure after several of its senior politicians were implicated in graft cases. Polls have put the Democrats behind Golkar and the Indonesian Democratic Party of Struggle (PDI-P) ahead of national elections next year.
Hari questioned the logic behind the government 2009 decision to cut the price of subsidized fuel in from Rp 6,000 per liter. "This is all just a game for them, and the poor are the ones who fall victim," he said.
Spending on fuel subsidies is set to reach Rp 193 trillion this year, compared with Rp 212 trillion in 2012, a substantial proportion of the national budget in both years. The reliance on imported fuel has also crippled the trade balance and weakened the rupiah.