Aditya Suharmoko, Jakarta – Subsidized fuel consumption this year may exceed the capped volume of 35.5 million kiloliters by close to 10 percent, possibly prompting the government to increase fuel subsidy spending, a ministry official says.
Evita H. Legowo, the Energy and Mineral Resources Ministry's director general of oil and gas, said Thursday "the consumption of subsidized fuels may increase 9.7 percent" to nearly 40 million kiloliters (kl).
The higher consumption is attributable to increasing demand, despite the government in May raising subsidized fuel prices by 28.7 percent on average, Evita said, while speaking at an energy commission hearing at the House of Representatives.
As of Aug. 27, Evita said, consumption stood at 25.76 million kl – 12.48 million kl of which was Premium gasoline, 7.75 million kl diesel and 5.52 million kl kerosene – or more than a third of the full-year estimate.
The high fuel demand may be due to strong car and motorcycle sales this year.
PT Toyota Astra Motor, which is jointly owned by Toyota Motor Corp. and Indonesia's largest auto distributor PT Astra International, has said it is optimistic national car sales can reach 550,000 units this year, breaking the record set in 2005.
However, the government remains optimistic in its consumption estimate for next year, which it sets at 36.8 million kl in the 2009 state budget.
In deliberations over the regional tax and retribution bill, the government proposed a progressive tax for car owners based on the number of cars they own in a bid to decrease fuel consumption as well as the number of cars on the streets.
A higher consumption of subsidized fuels may require the government to increase spending on the fuel subsidy, thus further burdening the state budget.
Spending on the fuel subsidy in the proposed 2009 state budget stands at Rp 101.4 trillion (US$11.06 billion), down from Rp 268.7 trillion in 2008.
For 2009, the government has proposed a budget cushion of Rp 6 trillion should the Indonesia Crude Price – Indonesia's benchmark oil price – surpass $130 per barrel. The government assumes the ICP to be $100 per barrel for next year.
If the ICP exceeds $130 per barrel and the government has spent its budget cushion, the government can raise subsidized fuel prices to maintain predetermined percentage ratios against international prices.
The price of Premium gasoline will be kept at 58.5 percent of the international price, diesel at 52 percent and kerosene at 23.4 percent, according to the proposed 2009 budget.
During the hearing, state oil and gas firm PT Pertamina suggested cars with engine capacities of more than 2,000 cubic centimeters should not be allowed to consume subsidized fuels.