Editorial: LPG scarcity

Sat, 09/06/2008 11:32 AM  |  Opinion

During Ramadan, there is increased cooking activity and the government knows very well people are sensitive to the supply of basic commodities - including liquefied petroleum gas (LPG).

Across the country and in Jakarta there are growing complaints over the scarcity of LPG. This is a slap in the face for President Susilo Bambang Yudhoyono, as the government is campaigning strongly for LPG as a main household cooking fuel.

Regrettably, the current LPG scarcity was worsened by the price increase announced recently by state-owned oil and gas company Pertamina and the company's plan to incrementally eliminate the fuel subsidy for users of 12-kilogram and 50-kilogram LPG canisters.

Don't misunderstand. We agree with the elimination of the fuel subsidy and so far we even pushed the government to lift all subsidies on gasoline fuels, as we believe removal of subsidies will help pursue energy conservation and establish a healthier economy.

But in the case of LPG prices, the government has to be cautious because the price increase will also affect the on-going process of conversion from kerosene to LPG, which aims to cut the dependency of low-income families on heavily subsidized kerosene for their daily cooking needs.

It is quite odd that the President was so surprised over the increase, as if he knew nothing about the Pertamina move. He launched into an open criticism against the company over the increase, sparking strong public controversy.

"Policies should not prompt new problems, especially when we are struggling to improve our economy. We should also consider the purchasing power of our people," Yudhoyono was quoted as saying after chairing a recent cabinet meeting, stressing that there would be no LPG price increase until the legislative and presidential elections in 2009.

Pertamina announced that it would have increased the prices of 12-kilogram and 50-kilogram LPG canisters initially by 9.5 percent (that is from Rp 5,250 to Rp 5,750 per kilogram). It then planned to keep increasing LPG prices by Rp 500 per month after the initial increase, until the whole subsidy was totally lifted. The current non-subsidized market price of LNG is about Rp 11,400 per kilogram. Meanwhile, the market price of a three-kilogram LPG canister is only Rp 15,000.

We are surprised the President seemed shocked by Pertamina's move, or was he just trying to save face over an insensitive decision that could jeopardize his image in a pre-election year. Our curiosity is legitimate as it is doubtful if the President would not be well-informed on such matters. A Pertamina official reportedly claimed the move has been approved by the government.

Whatever the reason, the LPG scarcity is really deplorable because it is happening when people are following the government policy to shift from kerosene to LPG.

Pertamina chief Ari H. Soemarno, said his company has distributed 12 million three-kilogram LPG canisters and stoves free, or 40 percent of the total cooking equipment to be distributed free to low-income families. The program has managed to reduce the kerosene fuel subsidy by Rp 7.7 trillion, he said.

The government must guarantee adequate supply and smooth distribution of LPG to the market to build public trust in the kerosene conversion program. We also agreed with the government's decision to postpone the LPG price increase, whatever the reason.

The recent scarcity of LPG clearly followed the announcement of price increases for the 12-kilogram and 50-kilogram LPG canisters, which may have sparked panic buying by consumers and stockpiling by LPG traders.

The three-kilogram LPG canisters have almost disappeared from the market because they are in high demand due to price differences. We hope the postponement of the Pertamina price increase will help make the situation more normal.

So far, low income families have been the most seriously affected by the scarcity of cooking fuel. When the kerosene conversion program was launched last year, the media frequently reported nationwide long queues for small quantities of kerosene.

The recent queues for LPG are only a repetition of public hardship due to inconsistent government policies. We really hope that the government will learn from this. The public interest should be the first consideration.

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