Car tax, power rationing could cut fuel consumption by 10%: Kalla

Rendi A. Witular, The Jakarta Post/Jakarta

The government hopes its planned measures to increase taxes on cars and cut back on lighting on highways and in shopping malls will cut national fuel consumption by up to 10 percent, saving it much-needed fuel subsidy money, Vice President Jusuf Kalla says.

The new regulations would progressively tax private vehicles and limit electricity use for advertisement billboards, shopping malls and on lights for highways, Kalla said at his office after Friday prayers.

"The government expects the regulations will help the country minimize fuel consumption by at least 10 percent of today's total, or in line with the fuel subsidy allocation," he said.

Kalla said the government might have to increase fuel subsidy allocations to Rp 110 trillion (US$1.14 billion), Rp 32 trillion more than the Rp 78 trillion the House of Representatives' Budget Commission had approved for this year's state budget, if fuel consumption remains high.

"We can't cut the subsidy and raise domestic fuel prices since we did it earlier this year. Such move would also burden the public. The most feasible way is to limit fuel consumption," he said.

The new regulation was approved in a limited Cabinet meeting led by President Susilo Bambang Yudhoyono late on Thursday. The President has tasked the Ministry of Energy and Mineral Resources to draft the regulations.

According to the ministry, 63 percent of the country's energy is derived from fuel with the remaining is supplied from gas, coal and other resources.

At present, Indonesia has to import 300,000 barrels of crude oil a day and 400,000 barrels of fuel products per day to meet increasing domestic demand, with fuel consumption this year estimated to reach about 59 million kiloliters.

Indonesia is currently facing fuel crisis because the high cost of oil, which hit US$60 a barrel in New York on Friday, and increased domestic demand has caused a cash flow problem at state oil and gas company PT Pertamina.

Pertamina said on Friday that domestic fuel stocks had fallen to 17.5 days reserve supplies on average from the "safe" level of 22 days.

In the meeting, President Susilo also ordered the Ministry of Finance to help increase Pertamina's fuel stocks back to its safe level by paying the company's needs in advance for its monthly fuel subsidies.

His statement, however, contradicted Kalla's, who said the government has never considered a plan to inject fresh capital into Pertamina to help revitalize the company as it would need some Rp 19 trillion to ensure its fuel stocks.

At present, Pertamina has to allocate its own cash to fulfill domestic fuel demand before the government reimburses the cost after auditing the company.

The government would also pay the firm's overdue subsidy for the 2003 and 2004 fiscal years from the finance ministry budget.

Pertamina director for marketing and trading Arie Soemarno said the company would be able to lift its fuel stocks to 18.5 days of reserve supply by the end of this month, and to 22 days by the third week of July.

He said during the Cabinet meeting that the government had agreed to channel an additional $170 million to Pertamina to help raise its fuel stock to 18.5 days, and $200 million for meeting the normal level of 22 days.

The additional funds are not included in the $1.37 billion allocation for buying fuel in July.

Other programs proposed for the fuel-saving efforts include intensifying law enforcement on fuel smuggling and improving the efficiency, governance and the productivity of Pertamina.

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