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Govt to collect funds from fossil fuel sales
The government will start collecting special funds from the sale of fossil-based fuels to the public in January next year to support the energy security fund
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he government will start collecting special funds from the sale of fossil-based fuels to the public in January next year to support the energy security fund.
According to Energy and Mineral Resources Minister Sudirman Said, beginning in January, the government will collect Rp 200 from every liter of Premium brand gasoline and Rp 300 from every liter of subsidized diesel sold to the public.
The minister said on Wednesday that the low crude oil prices at present made it a good time to introduce the fuel levy.
He said that proceeds from the fuel levy would be used to support the development of renewable energy and the national electricity program.
Sudirman estimated that the government would raise between Rp 15 trillion and 16 trillion (about US$1.2 billion) a year from the fuel fund collection.
'We are taking advantage of the low international oil prices to collect the energy security funds,' he told journalists following the announcement of the cut in prices of Premium gasoline early next month.
Beginning Jan. 5, the price of Premium gasoline will be lowered to Rp 7, 150 per liter from Rp 7,400 at present, while the price of diesel will be cut to Rp 5,950 per liter from Rp 6,700 to adjust to lower international oil prices.
According to Sudirman, the market price of Premium gasoline and diesel are currently about Rp 6,950 and Rp 5,650 per liter, respectively.
People will have to pay Rp 200 per liter of Premium and Rp 300 for diesel, to support the energy security funds.
Unlike Premium gasoline which is sold at market price, the government still provides a subsidy of Rp 1,000 per liter of diesel.
The collection of the security funds is enshrined on the 2007 Energy Law. The plan was first considered following an overhaul in energy subsidies in late 2014 in order to reduce the burden on the state budget.
Under the overhaul scheme, the government scrapped gasoline subsidies and regulated the price of the commodity in accordance with world oil prices. It kept allocating a fixed subsidy for diesel fuel, but also regulated the price in accordance with fluctuating benchmarks.
The policy ran well when the global oil price was under pressure. However, when prices increased in the early second quarter of the year, the government did not raise gasoline prices, as it wished to maintain people's purchasing power, forcing the state-owned oil and gas company Pertamina ' which distributes the majority of fuel nationwide ' to bear a price gap of trillions of rupiah.
According to Sudirman, the government will soon draft a regulation related to the mechanism and the details of the energy security fund, which he said would be managed by his office.
'The principle is that to decide first [about the fund] and later design its mechanism [and other details],' he said, adding that the Supreme Audit Agency (BPK) would also take part by auditing the fund.
In order to maintain the price to balance the gap carried by Pertamina, the government will continue reviewing fuel prices, and possibly the energy security fund, every three months.
