Government wants to restrict subsidized fuel for luxury cars

The government expects to control the consumption of subsidized-fuels by imposing restrictions based on the type of private cars, Energy and Mineral Resources Minister Darwin Zahedy Saleh told reporters Friday.

Darwin hinted that those restricted from consuming subsidized fuels were those categorized as luxury cars. No clear definition as yet what constitute as luxury car in the upcoming rule.

“We are heading to that [imposing the policy]. Private cars with specific classification are not supposed to receive subsidy. We now begin to design and testing the policy,” Darwin said.

Subsidized fuels used for private cars are Premium gasoline and diesel. Both fuels are sold at Rp 4,500 (48.98 US cents) per litter, while the non-subsidized Pertamax is currently sold at Rp 7,100 per liter in Greater Jakarta.

Downstream oil and gas regulator BPHMigas has conducted survey on cars fuel consumption in Bintan, Batam, and Bangka Belitung. The ministry said the survey was part of the preparation to control the subsidized-fuels consumption by private cars starting this year.

“We cannot control the international crude price, but we can still possible to manage our demand side,” he added.

Crude oil traded above $82 a barrel in the New York Mercantile Exchange, poised for a second weekly gain due to the expectation of increasing demand from China, Bloomberg reported Friday.

The fuel subsidy has been always the major spending in the state budget. As the crude price is increasing, the fuel subsidy is expected to increase significantly this year.

In the 2010 state budget, the government set the Indonesia Crude Price (ICP) assumption at $65 per barrel. But, in the revised 2010 state budget being proposed by the government, the assumption is increased to $75 per barrel. The new assumption will increase the fuel subsidy by 30 percent to Rp 89.29 trillion, Finance Minister Sri Mulyani Indrawati announced Wednesday.

Despite the increasing crude price, Darwin said the government would try its best to maintain the subsidized-fuel prices at the current level. He added that the subsidized-fuel prices could be maintained at the current level until the crude price not more than $85 per barrel.


Crude oil traded above $82 a barrel in the New York Mercantile Exchange.