T

he newly appointed deputy Minister of energy and mineral resources, Widjajono Partowidagdo, has reaffirmed his commitment to support an unrealized plan to limit the distribution of subsidized fuels starting next year.

Among the proposed limitations would be the banning of private cars from purchasing subsidized fuels, which were meant for low-income people and public transportation, he said.

He said the plan would be carried out in Jakarta, Bandung and Surabaya where fuel consumption was very high.

“All private cars in big cities have to use non-subsidized fuels, but in smaller cities, we’ll allow the use of subsidized fuel,” said Widjajono on Friday.

“We’ll also require all public transportation vehicles to use gas-based fuels.”

To complement the ban, the government will improve the quality of the public transportation system in order for people who can not afford to buy non-subsidized fuels to use public transportation vehicles.

“In 2008, when the government raised the price of Premium [a variety of subsidized fuel] to Rp 6,000, people started to use the Transjakarta buses. But when the price went back to Rp 4,500, they used private vehicles again,” he said.

To boost the utilization of gas-based fuels for private cars, the government would provide subsidies for converter kits to allow them to use gas. The price of the kits is estimated to reach Rp 10 million
per unit.

“The subsidies will be given to the kit makers so that the price can be cheaper and more affordable,” Widjajono said.

Indonesia has suffered dearly from the soaring price of oil, with fuel subsidies stretching the state coffers. Around 20 percent of the state budget is allocated for the subsidy, which is mostly enjoyed by wealthy people who have private cars and motorcycles.

Last month, the government and the House of Representatives’ budget committee agreed to set the quota for subsidized fuels at 40 million kiloliters for 2012, slightly lower than this year’s quota of 40.4 million kiloliters.

That figure could only be achieved if the government implemented limitations on subsidized fuel distribution.

The government planned to apply the limitations in April this year, but the House opposed the idea and requested the government to conduct more comprehensive studies on the impact of the policy, and to accelerate the construction of necessary infrastructure for limiting fuel consumption.

Energy expert Pri Agung Rakhmanto of ReforMiner Institute was pessimistic the plan could be materialized next year.

“Ideally, there should have been a clear decision and legal umbrella. And we have had none so far. So I think next year, we won’t see any limitation implemented,” he said.