'Smart card' for fuel seen as not smart enough

Ika Krismantari ,  The Jakarta Post ,  Jakarta   |  Fri, 06/06/2008 1:15 AM  |  Headlines

Costly satellite technology coupled with the high potential for public unrest has led the government rethink the "Smart Card" program to limit motorists' purchase of subsidized fuels.

Despite all the publicity on the claimed effectiveness of the system, Energy and Mineral Resources Minister Purnomo Yusgiantoro on Wednesday put the breaks on the plan.

Purnomo, having recently been criticized for mismanaging the country's energy sector, said there would be greater financial burden on the government should the plan be launched without a comprehensive study.

"We are now studying the Smart Card (program) once again. We need to study the financing of the program because it will be expensive, especially when it involves satellite technology," said Purnomo during a hearing with the House of Representatives' energy commission late Wednesday.

According to Purnomo, satellite technology is required because the downstream oil and gas regulator BPH Migas will need an interlinked system which can help the regulator supervise around 2,000 gas stations in Java and Bali.

The agency is responsible for implementing the program.

Purnomo said the Smart Card system had so far received negative responses from the public in Bali and Batam where a trial run was recently launched.

"It's also impossible to do it in Jakarta as the market here is more complicated. We will review the plan," he said.

Purnomo's statements contradicted his earlier optimism during a similar hearing two months ago when he boasted the program would take effect early January next year.

At the previous hearing, Purnomo said the government would start the bidding process for the procurement of the technology in June and start the distribution of the Smart Cards to the public from Sept. 31 to Dec. 31.

He did not mention anything about satellite technology.

The Smart Card program was proposed earlier this year to reduce fuel consumption and save on fuel subsidies, which are expected to soar to Rp 132.1 trillion (US$14.3 billion) from the 2008 state budget's allocation of Rp 126 trillion.

The Smart Card, which keeps track of the amount of subsidized fuel an individual purchases, would be distributed to motorists and public transportation operators.

Users would be required to show the cards every time they purchased subsidized fuels.

Previously, BPH Migas chairman Tubagus Haryono said the Finance Ministry had allocated a budget of Rp 300 billion for the implementation of the program.

Energy analyst Pri Agung Rakhmanto recommended the government use smarter and more efficient strategies in trying to limit public fuel consumption by issuing a regulation giving certain groups of motorists priority in buying subsidized fuels.

"Just issue a clean-cut regulation saying only certain groups of people can buy subsidized fuels, while the others cannot. The government must be strict in implementing such a rule," he said.

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PrimaryDrive (not verified) — Sun, 06/08/2008 - 9:24pm

Eri said: "Smart cart will not function properly, since there is possibility for the holders who have excess supply to re sell it."

When the smartcard is secured properly, you can't resell your credits. I can program its crytography so that you can't transfer credits, except to devices in the tank stations. I can also make it so that once transfered, the credits cannot be used again.

So, the only way to sell your credits is by selling the whole card, which is impractical if you need half of its content yourself.

Besides, it does not actually matter if you resell your credits. So, you voluntarily decline from your priviledge. This is nothing unfair with this.

LLH (not verified) — Sat, 06/07/2008 - 10:03am

I am sure with today’s technologies it is possible to add colour in the fuel.

Example if only motorbikes etc. can fill up subsidized fuel added red colour, and cars with normal fuel, then it should be easy for the police to control car for subsidized fuel. If the police trace the red colour in a car, they can then fine the owner.

The smart card, the government can issue to the smaller groups who allowed subsidized fuel, example the fishing industry etc.

In this way, the car park pays the burden of the higher fuel price.

Eri (not verified) — Sat, 06/07/2008 - 4:32am

I think, let the price go open float price. The government can focus only on the impact. Since the govenment has additional money from money that allocated to fuel subsidy, they can focused on poverty, free education, health and others. Smart cart will not function properly, since there is possibility for the holders who have excess supply to re sell it.

PrimaryDrive (not verified) — Sat, 06/07/2008 - 3:23am

I'm very puzzled as to why we need satelite technology. I used to teach Cryptography (the science of encrypting data, which is crucial for implementing electronic money or similar application) in the past. From what little I learned, we should be able to program each smartcard so that it can load something like fuel credits. How much it can load can be tied to the identity of the card, and therefore to its owner social status. When we buy fuel at a gas station we transfer some fuel credits from the card to the station. Each credit unit is cryptographically signed, so it can be checked for autenticity. Basically, all the authority needs to do is to check whether the amount of fuel sold by a station matches with the amount of fuel credits it receives. That's all. This can even be done off line. So, not even a telephone connection is needed, let alone satelite.

I'm not sure about the overall cost. The initial budget of 300 billion RP is perhaps a bit underestimated, but even a double or a triple of that amount is nothing compared to the who bulk of fuel subsidy.

Overall, I think modern indentity verification technology like smartcard is a key stone towards effective and honest distribution of any kind of subsidy, priviledges, that kind of stuff. It should be seen as part of our infrastructure.

Someone (not verified) — Fri, 06/06/2008 - 10:52pm

Indonesian people (read: government) need to learn how to think first before speak. And also should avoid giving people false information especially about new tech. They always try to use the newest technology without really considering it first...can't you think of something else? geeezzz...

Asep jip (not verified) — Fri, 06/06/2008 - 1:56pm

I think smart card is not the effective way for reducing the fuel consumption, because it needs much money to implement. Beside that, Indonesia is a huge country with big amount of population, so it is so hard to spread all smart card to all Indonesians. I think the better way to control the use of fuel is making the differentiation in fuel price between public transportation vehicle and private car. Government can implement the higher price of fuel to private car, because of course the user of private car is high economic people. moreover, usually each part of rich family uses different car, you can imagine if there are 5 members of rich family use their own car, so how much fuel must be spent every day. so the price differentiation can save the use of fuel and ensure that the subsidy of fuel goes to the right people.

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