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resident Joko '€œJokowi'€ Widodo will hold a Cabinet meeting today (Tuesday) with discussions on several energy issues such as the recommendation to end registered octane number (RON) 88 imports, build refineries that would allow Indonesia to be self-sufficient in RON 92 gasoline, and the planned fixed-fuel subsidy scheme.

These recommendations were included in a list made by the oil and gas reform team that had been formed by the Energy and Mineral Resources Ministry, the ministry'€™s secretary-general M. Teguh Pamudji said on Sunday.

'€œThe recommendations have been proposed by the reform team and the Cabinet meeting will discuss whether or not to implement the policy in 2015,'€ he said.

The reform team '€” established recently to review all aspects of the upstream and downstream oil and gas business in the country '€” recommended that state-owned oil and gas firm PT Pertamina stop importing RON 88 to diversify the company'€™s supply sources.

The halt on imports of RON 88 would help Pertamina renew its refineries and produce RON 92 gasoline, team chairman Faisal Basri said. '€œPertamina has said that it would only need 5 months to stop the import and several months to prepare its refineries,'€ he added.

Pertamina distributes RON 88 gasoline under the label '€œPremium'€, a product that remains subsidized by the government. Premium is currently priced at Rp 8,500 (7 US cents) per liter, 30 percent higher than before the cut in government subsidies on Nov. 18.

The reform team'€™s research and investigation concluded that the importation of RON 88 had been conducted in a non-transparent mechanism without a clear benchmark price on the global level, Faisal said.

'€œIndonesia is the only country that still buys RON 88, but never has bargaining position for the price. This practice has benefited oil cartels, even though we can directly purchase RON 92 with a standard price based on the Mid Oil Platts Singapore [MOPS],'€ he explained.

Although other countries have changed to higher gasoline specifications, which burn more cleanly for the environment and help engines perform better, Indonesia still uses the lower-specification gasoline, in part because of its refineries'€™ specifications and capabilities.

There are currently six refineries in the country operated by Pertamina with a total combined capacity of more than 1 million barrels per day (bpd) in capacity. However, because of their age, the refineries are running below full capacity. All of the refineries are only able to produce RON 88 gasoline, except one located in Balongan in West Java.

Marwan Batubara, executive director of Indonesian Resources Studies (IRESS), told The Jakarta Post that the recommendation was basically positive and should be implemented by the government if the reform team based its rational only on financial means or the condition of the state budget.

On the other hand, Marwan said the recommendation would prompt various side effects, such as the rise of oil imports due to the halt of Pertamina'€™s RON 88 production and its upgrading that needs at least three years.

'€œThe government needs to consider that there will be side effects such as problems of energy sufficiency and a lot of lay-offs in Pertamina. We hope that the reform team comprehensively analyzes its recommendations,'€ he said.

Previously, Pertamina marketing and trading director Ahmad Bambang said that although all refineries in the country have produced RON 88, it would only able to meet 50 percent of the domestic demand, claiming that '€œthe elimination of RON 88 will weaken our energy security'€.

Aside of these recommendations on RON 88, Faisal said that his team also suggested that the government implement a fixed-fuel subsidy scheme next year as the most '€œcomfortable'€ way for the state budget amid the high volatility of global oil prices.

Finance Minister Bambang Brodjonegoro has said that the fixed-subsidy scheme, in which subsidies are fixed at between Rp 1,000 to Rp 2,000 per liter from the market price, could reduce energy subsidy significantly and safeguard the state budget from unwanted fluctuations in the US dollar and oil prices.