Smart Card budget ready, to start before July

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Fri, 04/25/2008 12:16 PM  |  Business

After being shrouded in uncertainty for some time, the plan to limit fuel consumption through the Smart Card program is finally being rolled out.

Downstream oil and gas regulator BPH Migas announced Thursday that it had secured Rp 300 billion (US$32.6 million) from the state budget to carry out the plan, which will start before July.

"The Finance Ministry finally agreed to set aside Rp 300 billion from this year's state budget," BPH Migas chairman Tubagus Haryono told reporters.

He said the regulating body was now waiting for a team from the Energy and Mineral Resources Ministry to issue a decree as the legal basis to implement the program.

"We will immediately open an auction for the procurement process for the program as soon as the decree is in place," Tubagus said.

Under the program, consumers will be given fuel consumption quotas and required show a smart card upon purchasing, which will have embedded digital records of their fuel consumption in a given period.

The quotas or time frames have yet to be decided.

Even though the committee is yet to set up a definite date for the program to start, Tubagus guaranteed that the program would be implemented before July to remain on budget for the final six months of this fiscal year.

The government has capped the volume of subsidized fuels at 35.5 million kiloliters (kl), down from 38.6 million kl a year earlier. Several analysts doubt the government will meet its target as fuel consumption for the first quarter of this year has already surpassed the consumption target by 9 percent.

This year the government has allocated Rp 126.82 trillion for fuel subsidies, triple that of the previous target. With global oil prices showing no sign of easing, analysts have forecasted subsidy spending will swell.

To keep the budget in check, the government has planned a number of programs, including the distribution of control cards, known as the smart card, to the public to limit the sale of subsidized fuels in the market.

Based on the latest survey, Tubagus said the smart card would be likely to target private vehicles, as they had been proven to be excessive fuel users compared to public transportation.

"However, we haven't set the figures for each vehicle yet and how they will be classified, whether it will based on engine capacity or the year of production," Tubagus said.

Meanwhile from the upstream sector, the director general of oil and gas Luluk Sumiarso said he was upbeat that this year's oil production target of 927,000 barrels per day would be achieved after he received commitment from oil operators on Thursday's meeting.

The government is hopeful that the target will help cushion the effect of global oil prices, with revenue from oil production to go straight to the state's pocket.

Luluk said earlier that the 2008 state budget would withstand heavy pressure from skyrocketing oil prices until the Indonesian Crude Price averages $125 per barrel, as it was still expecting to enjoy a surplus from oil price hikes at that price.

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