Part 2 of 2: Beware of motives behind premium gasoline phaseout

Options offered by the government so far are deemed as unable to touch the substance as the study on the policy to control subsidized fuels recommended by Article 7 (2) in the State Budget 2011 are immature.

Political party factions in Commission VII, especially the Golkar Party, noted that it would be too naive for the government to stick to its plan to impose the policy in January next year.

Such a discourse is neither a proper or wise option in the eyes of the public, who have been affected by the economic crisis.

The inflation rate will for sure increase and affect among others the real sector, especially small and medium-scale enterprises, which often operate private cars.

The government cannot enforce instantly a policy that will affect the interests of the majority of people without a massive and extensive information dissemination campaign.

It is important to verify reports of violations in the distribution of subsidized fuels in the field.

The subsidized fuels allocation is very much unfair. Some 77 percent of the subsidy is enjoyed by the group with higher income based on the National Social-Economy Survey (Susenas 2008). In the future, subsidized fuels must be allocated strictly for those who need it.

The House, however, is pessimistic about the government’s proposal, considering the mechanism in the field which has not prepared for the implementation of the regulation on subsidized fuels limitation.

It looks as if the government does not have a long-term strategy concerning subsidy reduction in
the form of a regulation on premium gasoline and diesel fuel consumption.

It will require a synergy among different sectors, not only the relevant ministries or institutions.

We must be on alert for a hidden agenda behind the imposition of the fuel regulation.

There is an impression that people are forced to shift from subsidized premium gasoline to non-subsidized Pertamax.

It is also possible that the government has chosen this scenario to increase the price of premium to its economic price (non-subsidized premium) or even that there is a scheme to remove premium gasoline from the market.

This must be explained to the public, because premium gasoline and diesel fuel are still in high demand among lower- and middle-income people.

The government has to make sure non-subsidized premium gasoline, subsidized premium gasoline and non-subsidized pertamax are available in the market.

There are many ways to reduce the fuel subsidy without adding to the people’s burden. The budget for fuel subsidy that we can save should go to the people in the form of public transportation or alternative energy, so that we can reduce our dependence on fossil fuels.

This means the government must enhance the campaign to convert premium gasoline to gas for private cars and public transportation across the nation.

The government also needs to improve education for all people to reduce the use of fossil fuels.

Let us wait for the government to take concrete action requiring all transportation means to use gas in the future, provided that gas is cheap and affordable.

The conversion of kerosene to liquid gas for low-income households is a successful example of the government’s program to cut subsidies, although in this field there have been many cases of gas canister explosions, and of the gas reaching the wrong target.

An important note for the government is to provide assurance for domestic gas infrastructure to support supply for public consumption. This has been a weakness of the government so far.

The public feels that they might not be given fair compensation if the conversion from fuel to gas is imposed, while mass transportation infrastructure remains inadequate as evidenced in the long overdue development of the subway mega project and the monorail in Jakarta. Similarly, gas stations are scarce in the city.

The government must realign its designs for public transportation.

Let us wait for the government’s strategic moves to implement the program of subsidized fuel limitation wisely and in a way that is beneficial for all parties. A careless decision will result in a program with a bad record.

Postponing the implementation of the subsidized fuel limitation policy will give the government a chance to prepare the program well without changing its substance.

The government has to focus on the strict monitoring of subsidized fuel distribution. There is another way to Rome to make Indonesians happy.



Postponing the implementation of the subsidized fuel limitation policy will give the government a chance to prepare the program well without changing its substance.



The writer is a member of House of Representatives Commission VII and the Golkar Party’s budget committee.