Jakarta – The policy disarray in the energy sector is increasingly concerning. After causing public unease through restrictions on the distribution of three-kilogram cooking gas canisters, now the intervention by Energy and Mineral Resources Minister Bahlil Lahadalia in relation to fuel import quota for private gas stations has caused new turmoil. This policy not only makes life difficult for people but also threatens the investment climate and the sustainability of national energy supplies.

The Energy Ministry issued a regulation limiting the increase in the volume of non-subsidized fuel imports to a maximum of 10 percent over the previous year's realization. The official reason is that this is to maintain the stability of national trade and to reduce the deficit resulting from oil and natural gas imports.

The circular was issued at a time when fuel stocks at private gas stations are low in the middle of the year. The demand for non-subsidized fuel is rising sharply, in line with consumers shifting away from Pertamina gas stations to private operators such as Shell, BP and Vivo. This sharp rise – of 91 percent – is actually good news. It shows that more and more middle-income people are stopping using subsidized fuel, which in turn eases the burden on state finances.

But instead of welcoming this, the government responded with restrictions that put pressure on private operators, while at the same time secretly pampering Pertamina. But this changing consumer behavior is a direct result of the collapse in public trust in Pertamina after the Attorney General's Office revealed the alleged scandal of adulterated fuel. Instead of pushing for this problem to be resolved, the government is making matters difficult for its competitors through this quota policy.

The Energy Ministry offered a 'solution' by obliging private gas stations to buy their base fuel from Pertamina. But this solution not only fails to address the problem but also reveals a new distortion. Foreign operators rejected it because Pertamina fuel contains additives such as ethanol, which are not consistent with their exclusive additive formulas.

This policy stands logic on its head. Import quotas imposed on a sector that is highly dependent on the flexibility of supplies will only lead to artificial shortages. When demand rises and quotas are not increased, supplies will come to a halt, prices will soar, and the public will lose out.

The turmoil in the fuel sector is part of the chaotic way policies are made under the control of Minister Bahlil. This shows that policymaking in the Energy Ministry has lost all analytical discipline, to be replaced by political power games, when every decision is taken to demonstrate control, rather than to resolve problems.

This kind of arbitrary policymaking will have a serious impact on the investment climate. By reducing the opportunity for expansion and putting pressure on profit margins, the government is sending the wrong message to foreign investors: Indonesia is increasingly unfriendly to strategic energy businesses.

If global companies like Shell, BP and Vivo pull out because they can no longer operate properly, the impact will be extensive – from mass job losses and fuel shortages to a decline in Indonesia's bargaining position in international energy markets. Ironically, all this is happening under a government that has promised eight percent economic growth and energy independence.

If President Prabowo Subianto wants the energy sector to be the driving force of economic growth, there must be an immediate evaluation of Minister Bahlil, because allowing arbitrary policymaking to continue will mean allowing the national energy sector to be controlled by interests that do not understand market logic or the public interest.

– Read the Complete Story in Tempo English Magazine

Source: https://en.tempo.co/read/2057676/illogical-limits-to-fuel-import-quota