Indonesia looks to re-aligning quota volumes for subsidized fuels
The Indonesian government is looking at re-aligning the quota amount of subsidized fuel oil (BBM) between premium and diesel types, in addition to lowering the amount of BBM subsidies. According to Ibrahim Hasyim, member of oil and gas regulatory agency BPH Migas, the quota for premium type BBM is too large, doubling the quota of diesel.
“If the quota of premium is not lowered, the consumption of subsidized BBM will potentially grow higher and burden [our] budget,” Hasyim told Finance Today on April 9.
However, the South Kalimantan governor calls his quota unfair. Representatives of Kalimantan’s four provinces have urged the House of Representatives to increase subsidized fuel quotas, saying that allocation for their provinces was too small.
Speaking on behalf of the delegates, South Kalimantan Governor Rudy Ariffin said the quota allotted to Kalimantan for subsidized fuels such as premium, diesel and kerosene was unfair.
Ariffin said that the quota for Kalimantan was 7% of the national quota of 40 million kiloliters, down from 7.19% last year, while other islands excluding Java generally received higher allocations for this year.
“It’s very unfair considering the growth in the number of two-wheel and four-wheel vehicles in 2011 in Kalimantan, which hit 15.5%. The consumption by fishermen on our island also soared by 5%,” Ariffin added.
A lack of subsidized fuel might lead to long lines at gas stations, as hoarders would buy fuel for resale at higher prices, and create disturbances in goods and services distribution, he said.
During the hearing, only Ariffin attended; the governors of West Kalimantan, East Kalimantan and Central Kalimantan were represented by their deputies.
A member of the commission, Asfihani of the Democratic Party, said he supported the governors’ request, reminding them that increasing their allocation would require another revision of the 2012 state budget.
The meeting ended with no decision, with lawmakers planning to convene a hearing on May 29 to hear from representatives of downstream and gas authority BPH Migas, state oil and gas company PT Pertamina and the National Association of Gas Station Owners (Hiswana Migas).
The House gave the government room to adjust fuel prices if the Indonesian Crude Price (ICP) was 15% higher or lower than the assumption set in the 2012 revised state budget.
(April 9, 2013)
