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Regulator works to keep fuel quota on track

Amid projected steady economic growth and robust vehicle sales next year, Indonesia’s subsidized fuel consumption is likely to exceed the quota established under the 2013 State Budget, an official says

Amahl S. Azwar (The Jakarta Post)
Jakarta
Fri, December 14, 2012

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Regulator works to keep fuel quota on track

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mid projected steady economic growth and robust vehicle sales next year, Indonesia’s subsidized fuel consumption is likely to exceed the quota established under the 2013 State Budget, an official says.

Djoko Siswanto, director of fuel distribution at downstream oil and gas regulator BPH Migas, said on Thursday that despite the fact that the government allocated 46 million kiloliters of subsidized fuel for next year, the largest quota to date, actual consumption would likely surpass that level.

“With the assumption that the nation’s economic growth is still going strong, along with the increase of car sales, it is very likely that the actual consumption of subsidized fuel next year to reach 48 million kiloliters, which was our proposal in the first place,” he told The Jakarta Post in a telephone interview.

The government and the House of Representatives earlier this year agreed to allocate 46 million kiloliters of subsidized fuel for 2013, despite the regulatory body’s prediction that consumption next year would reach 48 million kiloliters.

This year, total consumption of subsidized fuel is predicted hit 45.27 million kiloliters, 8 percent higher than the 41.7 million kiloliters used in 2011.

The government initially set aside funds for 40 million kiloliters of subsidized fuel this year, less than the 41.7 million kiloliters consumed in 2011.

In September, the House’s Commission VII on energy approved the government’s bid to increase this year’s subsidized fuel quota by around 4 million kiloliters to a total of 44 million kiloliters.

Earlier this month, the same commission endorsed a second government bid to increase the subsidized fuel quota amid soaring consumption.

In a hearing with the lawmakers in December, Energy and Mineral Resources Minister Jero Wacik blamed robust auto sales as the root of the problem driving soaring consumption of subsidized fuels.

According to data from the Indonesian Automotive Industry Association (Gaikindo), 923,132 cars were sold in the first 10 months of this year, with the figure expected to reach 1,050,000 by the end of this year, surpassing earlier estimates of 940,000.

While acknowledging that it was easier said than done, Djoko said BPH Migas would still work aggressively to oversee fuel distribution to ensure it would not exceed the established quota next year.

He said the agency had put forth extra efforts to fight irregularities in the distribution of the subsidized fuels.

As of mid December, the agency’s newly formed security team, comprising 1,400 personnel, managed to disrupt the smuggling of as many as 3.6 million liters of subsidized fuel.

Last year, according to Djoko, BPH Migas managed to save up to 1.7 million liters of subsidized fuels from attempted thievery and smuggling at a time when the agency had yet to recruit its own security personnel and merely relied on cooperation with law enforcement.

Currently, the regulator and state oil and gas firm PT Pertamina are entering the tender process for next year’s fuel distribution monitoring system. The IT company that wins the bid is hoped to help put the system in place by mid 2012.

“Basically, the IT system will help us to prevent luxury cars from consuming cheap, subsidized fuel,” he said. “We will see in the first three or six months of next year the trends in [fuel] consumption. I hope, by pulling all of our strength, we can ensure actual consumption will not surpass the quota.”

Most motorists prefer to purchase subsidized fuels such as Premium, the local brand of RON 88 gasoline which is sold at Rp 4,500 per liter (the cheapest in Southeast Asia), instead of non-subsidized fuels such as Pertamax, sold at around Rp 10,000 per liter.

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