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Govt asked to impose cap on unsubsidized gasoline
The fuel subsidy assessment team has proposed that the government impose a price cap on non-subsidized gasoline if it goes ahead with its plan to limit the sale of subsidized fuels next month
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he fuel subsidy assessment team has proposed that the government impose a price cap on non-subsidized gasoline if it goes ahead with its plan to limit the sale of subsidized fuels next month.
Imposing a price cap of Rp 8,000 (91 US cents) per liter for non-subsidized Pertamax gasoline would be necessary to ensure that private car owners would not be seriously hurt if the fuel price continued to increase from the current level, Anggito Abimanyu, head of the assessment team, said in Jakarta on Monday.
Pertamax is the brand of non-subsidized gasoline distributed by Pertamina, which is currently sold for Rp 8,100 per liter. Anggito said that if the price went above Rp 8,000, the government should provide a subsidy to cover the balance. But he did not say if the non-subsidized gasoline brands sold by private retailers such as Shell and Petronas would also be subject to a price cap.
Anggito said the proposal to impose a price cap was one of three options presented to the government for reducing the high fuel subsidy. The second option is to raise the price of the subsidized fuel Premium gasoline by Rp 500 per liter from the current Rp 4,500 per liter.
“However, if the government chooses this option, public transportation vehicles should receive a rebate of Rp 500 per liter,” Anggito said after submitting the team’s three options to the government.
The third option is to limit the allocation of Premium gasoline. “In the long run, there should be an allotment system because the government could target the subsidized fuel to the right segments,” the former chief of the Finance Ministry’s fiscal policy office said.
The team, comprised of economists from the University of Indonesia (UI), the Bandung Institute of Technology (ITB) and Gadjah Mada University (UGM), was appointed by the government to find the best way to limit the sale of subsidized gasoline.
The final decision will come during a working meeting between the Cabinet and the House of Representatives on Tuesday.
Under the current planned restriction policy, only public transportation vehicles will be allowed to buy subsidized fuels. Private car owners must buy non-subsidized fuels under the program
which will begin in April this year in Greater Jakarta. It will expand to other parts of Java and Bali in July, and to Sumatra and Kalimantan in 2013.
Energy and Mineral Resources Minister Darwin Zahedy Saleh said the decision to delay or implement the policy on time in early April or to determine which options would be enacted, would come after consultation with the House.
“Pak Hatta and I would report to the President about the conditions. There are other considerations, so we will implement [the policy] at the best time. It cannot be announced right now because the government will make the decision after hearing the House’s views,” Darwin said.
Coordinating Minister for the Economy Hatta Rajasa said that, due to several changes including soaring global oil prices, a more comprehensive assessment was needed to make the policy effective.
