Fuel rethink: A gas station in Cikini, Central Jakarta, offers Premium subsidized gasoline and Solar diesel fuel for Rp 4,500 (46 US cents) a liter. Government plans to set Premium prices at Rp 4,500 a liter for motorcycles and public vehicles and Rp 6,500 for private cars has met criticism, with President Susilo Bambang Yudhoyono saying on Friday that the government would take a second look at its dual-pricing scheme. (JP/Jerry Adiguna)
President Susilo Bambang Yudhoyono says he will listen to criticism of government plans to introduce a dual-pricing scheme for subsidized fuel before deciding on a final policy.
“The government’s new policy on subsidized fuel will be made in the very near future,” the President told a press conference at Halim Perdanakusuma Airport in East Jakarta on Friday.
Yudhoyono made his comments after a limited Cabinet meeting was convened at the airport to discuss the fuel subsidy, among other things, after he returned from a 5-day tour of ASEAN member nations.
“In two days, I will receive the full report on the potential impacts and other technical issues on the dual-pricing scheme,” Yudhoyono said. “If the risks are too great, the government will not endorse it.”
Also at the meeting were Vice President Boediono, Energy and Mineral Resources Minister Jero Wacik and Coordinating Economic Minister Hatta Rajasa.
The dual-price scheme, which would set the price of subsidized fuel at Rp 4,500 (46 US cents) for motorcycles and public vehicles and Rp 6,500 for private cars, was introduced to reduce government expenditure on the subsidy, which topped Rp 211.9 trillion last year.
Economists have said that the nation’s subsidized fuel consumption would reach 50 million kiloliters in 2013, up from 44 million kiloliters last year, further straining the state budget.
Meanwhile, critics have said that it would be difficult to implement the scheme, as scalpers would buy fuel at the lower price for resale to the owners of private vehicles.
“Besides being prone to misappropriation, dual pricing would also hamper people’s mobility. It is a violation to the basic rights of consumers,” Tulus Abadi of the Indonesian Consumer Protection Foundation (YLKI), said.
Meanwhile, Bayumi Usman of the Association of Fuel Station Owners (Hiswana Migas) said in a statement quoted by kompas.com that its members were not ready to implement the system. “If there is price disparity for a single product, consumers will find ways to get the one with the cheaper price. The station selling cheaper gasoline will be overwhelmed by buyers while the others would see less income.”
Economists have said the scheme would not greatly reduce the government’s subsidy expenditure, suggesting that prices be raised across the board.
In his statement on Friday, Yudhoyono said that the poor would remain at the heart of the government’s policies. “This is not merely about making a decision on option A or B. I know the implication of higher prices for commodities could impose more burdens on the poor,” he said. “We need to ensure that our finances are healthy, but the poor must also be protected.”
Jero previously said that the policy would save Rp 21 trillion by the end of the year, and that 77 percent of fuel subsidies were enjoyed by members of the country’s upper and middle classes.