Govt spends Rp 1.1 trillion on kerosene subsidy a year

JAKARTA (JP): President Soeharto said yesterday that it cost the government at least Rp 1.1 trillion (US$416 million) to subsidize kerosene for home use every year.

"Our kerosene consumption is 9.9 million kiloliters a year, and the government subsidizes it at Rp 131 a liter," Soeharto said. Kerosene sells at Rp 280 a liter.

The President said the government was trying to encourage people to use coal briquettes for cooking to reduce the amount it paid in subsidies.

"Coal briquettes are not only cheaper but are also clean," he told villagers after officially opening a coal briquette plant in Gresik, East Java.

The plant was built with an annual production capacity of 120,000 tons by state-owned PT Tambang Bukit Asam coal company at a cost of about Rp 8.4 billion (about US$3.5 million).

"We have 31 billion tons in coal reserves, equivalent to 120 billion barrels of oil," Soeharto said.

The President said that with such a big energy potential, Indonesia had a lot of room to diversify its energy resources.

He said the coal reserves alone were enough for 300 years of energy consumption.

"We prioritize hydro-power and geo-thermal power for domestic use, while oil and gas are for export," he said of the government's energy policy.

To meet future demand for coal briquettes, the government will build more plants in Serang, Semarang and Cilacap.

The three sites were chosen because they were near ports.

Kerosene and wood are commonly used by Indonesian households, although the government has said that using wood speeded up deforestation.

"Deforestation could endanger future generations, it also causes floods," Soeharto said.

Minister of Mines and Energy I.B. Sudjana said yesterday that 100 villages in 10 provinces have begun using briquettes since the briquette promotion campaign was launched in 1993.

At the discussion Suharto was asked many questions. One restaurant owner complained it was hard to buy a briquet fueled stove, at which point East Java's Governor Basofi Sudirman whispered to the president.

"The governor whispered to me that he can provide as many stoves you need," Antara quoted Soeharto as saying. (06)