Govt, Commission agree to lower fuel quota in 2006
Leony Aurora, The Jakarta Post, Jakarta
The government and the House of Representatives' Commission VII on energy and mining have agreed on a lower quota of subsidized fuel for next year, excluding demand from industry and state power firm PT Perusahaan Listrik Negara (PLN).
The consumption of heavily subsidized premium gasoline should not exceed 17.08 million kiloliters (kl), kerosene 10 million kl and diesel fuel 14.5 million kl next year, the commission concluded after a hearing with the Ministry of Energy and Mineral Resources and related agencies on late Wednesday.
"We will not total the quota," said the commission's chairman Agusman Effendi, saying that such practice had given room for the government to tamper with the quota's fuel composition.
Despite higher demand in an improving economy, the approved quota for next year was lower than that agreed upon in the second revision of the 2005 state budget.
The quota for premium gasoline for this year was set at 17.20 million kl, kerosene for household 10.44 million kl and diesel fuel 26.36 million kl -- of which more than half was allocated for industry and PLN. Adding diesel oil and fuel oil, the total quota for 2005 is maintained at 59.6 million kl.
For next year, the diesel fuel included in the quota will aim mostly at the transportation sector, with some 10 percent allocated for small enterprises and fishermen.
Industry, as well as PLN, used to get fuel at subsidized prices -- slightly higher fuel for transportation and household purposes. To suppress the ballooning subsidy, state oil and gas firm PT Pertamina has applied market prices for industries using more than 24 kl in a month since July.
The company plans to expand the number of industries that have to pay market prices by lowering the monthly subsidized quota to 8 kl in the near future.
"PLN will also have to pay market prices," said Minister of Energy and Mineral Resources Purnomo Yusgiantoro after the meeting. Next year, PLN would get a direct subsidy of some Rp 8 trillion (US$777.45 million), he said.
This year, PLN will receive a quota of 8.4 million kl of fuel to generate power and Rp 12.5 trillion in direct subsidy. However, it will have to pay market prices -- more than double the price of subsidized fuel -- for some 3.1 million liters of additional supply.
It has requested that the government increase electricity tariffs and apply an automatic pricing adjustment scheme starting next year, as costs to generate power rise due to soaring global oil prices. PLN booked net losses of Rp 2.02 trillion and an operating income of Rp 2.56 trillion last year.
The commission also recommended that the Indonesian Military and the National Police receive cash subsidies and buy fuel at market prices. It did not specify the amount of the subsidy.
It also tasked the Oil and Gas Downstream Regulatory Agency (BP Migas) to tighten control of fuel distribution, particularly after Pertamina's role as sole distributor ends in November.
The commission also tasked the Central Statistics Agency (BPS) to conduct a nationwide census on kerosene next year to determine specific consumption for the 2007 state budget.