Subsidized Fuel Prices Proposed at Rp8,000

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  • AP/Rick Bowmer

    AP/Rick Bowmer

    TEMPO.CO, Jakarta - A number of public gas station entrepreneurs are calling on the government to raise the prices of subsidized fuels to Rp8,000 per liter, from their current prices of Rp6,500 per liter of Premium gasoline, and Rp5,500 per liter for diesel fuel, locally known as Solar. 

    “Ideally, the prices of subsidized fuels should be set at Rp8,000 per liter,” said the chairman of the Association of Gas Station Owners (Hiswana Migas), Eri Purnomohadi, in Jakarta on Monday. 

    He believes that increasing the prices is the only solution to help ease the burden of fuel subsidy on the State Budget (APBN). 

    “Many ways of controlling or restricting the consumption of subsidized fuels have been put on trial and implemented, but instead of succeeding it caused shortages and chaos in the field,” he said. 

    On the other hand, the production and marketing of private vehicles continue to rise anuallythe number of new vehicles has exceeded 1,1 million units per annum since a couple of years ago. The situation is exacerbated by the absence of a comprehensive, efficient and reliable public transportation systeman area of concern that the government needs to improve. 

    However, Eri believes that before the prices are re-adjusted, the government needs to implement some sort of a social safety net. “For example, underprivileged residents could be given a cash subsidy of Rp300,000,” he said. 

    The distribution of such subsidies would not burden the APBN too much because it is only disbursed once annually, while the savings will continue to benefit the APBN throughout the year. 

    According to Eri, the acquired savings need to be spent on the developing liquefied natural gas (LNG) as an alternative source of energy, which will ultimately reduce the strain on the APBN.

    “It should also be used to improve the health, education, and mass transportation sectors,” he said.

    Rp246.5 trillion were allocated for fuel subsidies in the 2014 Amended State Budget (APBNP), while the draft for the 2015 State Budget allocates Rp291.1 trillion for fuel subsidies.