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Fuel control program shows little progress, changes focus

Almost one year since the government introduced its fuel control and monitoring system, radio frequency identification (RFID) devices on targeted cars and fuel stations have shown little progress

Raras Cahyafitri (The Jakarta Post)
Jakarta
Mon, April 21, 2014

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Fuel control program shows little progress, changes focus

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lmost one year since the government introduced its fuel control and monitoring system, radio frequency identification (RFID) devices on targeted cars and fuel stations have shown little progress.

This failure indicates there is no effective short-term mechanism for limiting fuel consumption other than increasing the fuel price.

The RFID program, which is part of a fuel control and monitoring system, was designed to maintain the consumption of subsidized fuel '€” gasoline and diesel fuel '€” to not exceed the quota.

So far, the RFID devices are installed at 17 fuel stations (SPBU) in Jakarta. That figure is far lower than the initial target of 274 SPBUs and 15 million vehicles with installed RFID.

Various issues, from installment complexity to the weakening rupiah, have been blamed for the paltry progress. PT Inti, the winner of the tender for RFID procurement, has asked for contract revision due to the growing cost from rupiah depreciation.

Amid the little progress of the program, Deputy Energy and Mineral Resources Minister Susilo Siswoutomo said the government was considering applying the fuel control program only on diesel fuel.

'€œThere is no legal umbrella on what cars are allowed to purchase subsidized fuel, either gasoline or diesel fuel [so] for now, we will focus the program on diesel, not gasoline,'€ Susilo said last week.

The shift of focus is very likely due to the growing consumption of diesel fuel, which tends to exceed the quota.

This year, the government has set the quota for subsidized fuel at 48 million kiloliters. PT Pertamina was appointed to distribute 47.35 million kiloliters, consisting of 32.23 million kiloliters of gasoline, 14.13 million kiloliters of diesel fuel and 900,000 kiloliters of kerosene.

According to figures from Pertamina, total subsidized fuel consumption rose 1.6 percent in the first quarter of 2014 to 11.2 million kiloliters compared to 11.02 million kiloliters the same period a year earlier. The first quarter consumption reached 23.6 percent of the subsidized fuel quota set for this year.

The data shows consumption of Premium gasoline (a subsidized fuel) reached 7.1 million kiloliters in the first quarter of 2014, or around 22 percent of the company'€™s distribution quota. This was 1.63 percent higher compared to 6.98 million kiloliters reported in the same period of 2013.

For diesel, Pertamina'€™s distribution was 3.85 million kiloliters in the first three months of 2014, or about 27.2 percent of the full year allocation. The first three months absorption was 3.9 percent higher than 3.7 million kiloliters recorded in the same period last year.

Pertamina marketing director Hanung Budya has said the national consumption of subsidized fuel was expected to reach 49.7 million kiloliters this year, higher than the quota.

He estimated gasoline fuel consumption would be lower than the quota, however, absorption of diesel fuel and kerosene would be over budget.

Diesel fuel consumption is estimated to reach 16.87 million kiloliters, higher than the 15.88-million-kiloliter quota. Meanwhile, kerosene consumption is expected to reach 1.1 million kiloliters, higher than the 900,000-kiloliter quota.

The government has been in trials to control the consumption of subsidized fuel for years as the importation of fuel and its products have tainted the country'€™s current account balance.

Prior to RFID program, there were a number of moves to control the subsidized fuel consumption, including stickers on cars authorized to purchase subsidized fuel and asking mining and plantations companies to ensure their operational vehicles did not use subsidized fuel.

Reforminer Institute executive director Pri Agung Rakhmanto said those fuel control programs would not have a lasting effect on fuel consumption.

'€œThe government has too many programs and so far there is no program to control subsidized fuel that is feasible,'€ Pri said.

'€œA short-term solution that can be used to limit fuel consumption is by increasing the fuel price. The long term solution will be conversion to other energy, which must be conducted consistently,'€ Pri said.

The government increased the subsidized fuel price by up to 44 percent last year, after a failed similar attempt in 2012 due to widespread protests.

It will be tough for the next administration to increase the fuel price particularly because political parties in the House of Representatives are more fragmented.

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