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

Sat, 25 Jun 2005, 00:00 WIB | Source: JP

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.