Fuel price hikes & smuggling

Fuel price hikes & smuggling

From Koran Tempo

The fuel price increase on March 1, with their adverse impact on ordinary people and the uneven distribution of fuel subsidy compensation funds to appropriate recipients, will likely be followed by more increases given that crude oil prices have risen to US$63-$64 per barrel.

Oil industry observer Kurtubi has predicted that the crude oil price will reach $70 per barrel in the fourth quarter of 2005. The government's oil subsidy burden will thus rise to between Rp 120 trillion and Rp 130 trillion.

Meanwhile, House Budget Committee chairman Emir Moeis said that if the government planned to increase fuel prices, the hike should be 30 percent as a 10 percent-20 percent increase would not significantly reduce the cost of the subsidies.

Against the backdrop of these unfavorable conditions, on Aug. 6 a naval patrol ship based in Riau seized a tanker, the Jaya Sukses II, owned by a partner of state oil company Pertamina on Batam island. It was smuggling 120 tons of diesel oil worth Rp 2 billion aboard a Honduran flag carrier Aiwamaru.

The Sukoharjo police in Central Java recently also seized 4,000 liters of contraband kerosene as it was about to be smuggled from Trenggalek, East Java, to Solo, Central Java.

The government and law enforcers should therefore intensify their control over fuel smuggling and hoarding while taking resolute action against the perpetrators before any fuel price rises are announced.

HANDIJAYA Tangerang, Banten