Local govts to monitor distribution of kerosene

Leony Aurora and Rendi A. Witular, The Jakarta Post, Jakarta

The government will soon allow local administrations to impose a levy on kerosene distributors to help them monitor the distribution of subsidized kerosene across the country.

Monitoring costs will reach Rp 500 billion (US$50 million) next year, with regional governments taking Rp 50 for each liter of the 10 million kiloliters of subsidized kerosene predicted to be used by households in 2006.

The money collected by the local administrations would be used to monitor kerosene distribution down to the village level, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Thursday.

"It will be regulated through bylaws," Purnomo said in a press conference held after a meeting with regional secretaries and provincial village empowerment agencies.

A decree issued by Minister of Home Affairs M. Ma'ruf on Oct. 3 stipulates that the national ceiling price for one liter of kerosene is Rp 2,275.

The price includes the subsidized price of Rp 2,000 a liter, transportation costs to a radius of 40 kilometers from depots at Rp 80 per liter, monitoring costs of Rp 50 a liter, as well as agent and distributor fees of Rp 55 and Rp 90 a liter, respectively.

After the government raised kerosene prices to Rp 2,000 a liter on Oct. 1 from Rp 700 a liter, there have been reports that kerosene was being sold at up to Rp 3,500 a liter to consumers in some regions.

Ma'ruf, who also attended the meeting, said local governments should determine their individual ceiling prices according to each area's geographical condition and purchasing power "as soon as possible".

"They know precisely the conditions in their areas," said Ma'ruf.

He also urged that the authority take preventive measures to make sure that price setting and other violations were minimized.

Pertamina's role as regulator and supervisor in the downstream sector has been relinquished to the Oil and Gas Downstream Regulatory Agency (BPH Migas) with the implementation of the new oil and gas law and its supporting regulations.

BPH Migas will coordinate with local administrations and the police to conduct fuel monitoring, particularly on kerosene, which is used mainly by low-income families.

Home ministry village empowerment agency director general Darjo Sumarjono said that at present, the costs to supervise fuel distribution were taken from the local budgets.

"Several areas cannot afford to allocate budgets for a complete supervision," Sumarjono said.

Pertamina through the Association of Oil and Gas Entrepreneurs (Hiswana) will collect the monitoring costs for now. Local administrations will take over after the bylaws supporting the home minister's decree are completed.

Meanwhile, the government is planning to distribute 10 million briquette stoves to families living below the poverty line in order to cushion the impact of the recent rise in fuel prices.

"We will provide the free briquette stoves for poor people as part of our to campaign to reduce the use of kerosene," Coordinating Minister for the Economy Aburizal Bakrie said after a meeting with Vice President Jusuf Kalla.

Aburizal appealed to the public to start using briquettes because they cost lower than kerosene and were easier to get. With the same energy output, a pack of briquettes is sold at around Rp 1,500, while a liter of kerosene is at least Rp 2,000.