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Jakarta Post

Jokowi fails to persuade SBY on fuel subsidy

  • Hans Nicholas Jong and Ni Komang Erviani

    The Jakarta Post

Nusa Dua, Bali   /   Thu, August 28, 2014   /  09:29 am
Jokowi fails to persuade SBY on fuel subsidy

Transitional talk: President-elect Joko '€œJokowi'€ Widodo (right) meets with outgoing President Susilo Bambang Yudhoyono in Nusa Dua, Bali, on Wednesday. The two leaders have committed to a smooth transition of power in October. JP/Zul Trio Anggono

President Susilo Bambang Yu-dhoyono hosted a two-hour discussion with president-elect Joko '€œJokowi'€ Widodo in Nusa Dua, Bali, on Wednesday evening. The President expressed his readiness to help Jokowi during the coming two-month transition period, but strongly signaled that he would not raise the price of fuel, as hoped for by Jokowi.

President Yudhoyono described their discussion as the first of a series of meetings between the two leaders before Jokowi officially takes over the reins of power from Yudhoyono, who has led the country for two terms since October 2004.

Yudhoyono said they discussed various issues during the meeting, including the 2014 and 2015 state budgets, but he made it very clear that he would not discuss technical matters with his successor. Instead, he has instructed his Cabinet ministers and all relevant government officials to arrange regular meetings with Jokowi'€™s transition team to ensure a smooth transfer of power in October.

'€œBy opening the window of opportunity for consultations, Jokowi'€™s transition team can communicate on official terms with the government,'€ Yudhoyono told a press conference at The Laguna Resort and Spa in Nusa Dua.

In emphasizing that he and Jokowi had not discussed technicalities, he added that '€œthe meeting was not a forum to negotiate'€.

Yudhoyono was likely referring to a request made by Jokowi to help ease the burden on the current-account deficit by raising the price of subsidized fuel.

The President did not confirm whether or not he had submitted to the request, but Jokowi indicated that they had discussed the issue of subsidized fuel prices.

'€œIt was a two-hour meeting, so everything was discussed [including fuel prices],'€ Jokowi said after the meeting. The outgoing Jakarta governor added that he had put a number of questions to Yudhoyono regarding the 2015 draft state budget.

The government was granted a subsidized fuel quota of 46 million kiloliters (kl) this year, which comprises 29 million kl of Premium gasoline, 900,000 kl of kerosene and 16 million kl of diesel.

In the last few weeks, many regions had been facing shortages of subsidized fuel supplies from state-owned oil firm Pertamina, but the firm insisted that it had to ration subsidized fuel to avoid breaching the quotas before the end of the year. As of Tuesday evening, however, Pertamina lifted the restrictions of subsidized-fuel sales around the country.

The President submitted to the House of Representatives on Aug. 16 a draft budget for 2015, totaling
Rp 2.02 quadrillion (US$172 billion), about 15 percent of which will be spent just on maintaining the subsidies. Yudhoyono said he had no plans to reduce energy subsidies, despite repeatedly giving his assurances that he would do his utmost to help the next government.

He has allocated Rp 363.5 trillion for energy subsidies next year, a significant rise from the Rp 350.3 trillion in this year'€™s budget. The funding for the fuel subsidy alone will amount to Rp 291.1 trillion, compared to
Rp 246.5 trillion in the 2014 budget.

'€œWe touched on some of the details, but the technical aspects will be followed up by the transition team and the ministries,'€ Jokowi said.

Previously on Monday, Jokowi had said that he would ask Yudhoyono to consider reducing the fuel subsidy by raising fuel prices before his term ended in October.

Yudhoyono'€™s administration and House lawmakers are slated to pass the 2015 state budget no later than Sept. 30, while Jokowi is scheduled to be sworn in on Oct. 20.

The President'€™s decision to maintain the exorbitant expenditure level on the fuel subsidy in the 2015 draft budget offers Jokowi only a limited amount of fiscal space with which to deliver his reform programs.

Before Wednesday'€™s meeting, Yudhoyono was seen entering the room with Cabinet Secretary Sudi Silalahi, Education and Culture Minister Mohammad Nuh, Coordinating Economic Minister Chairul Tanjung and Coordinating Political, Legal and Security Affairs Minister Djoko Suyanto.

Jokowi, meanwhile, was accompanied by NasDem Party chairman Surya Paloh.

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