Fuel saving program can reduce fuel subsidy to Rp 138 trillion

Coordinating Minister of Economy Aburizal Bakrie said in Jakarta on Monday that the fuel saving program introduced by the government last week would be able to keep the fuel subsidy at affordable level of Rp 138 trillion if the program achieved its target to lower the fuel consumption by 10 percent by the end of this year, Kompas reported on Tuesday.

Speaking to reporters on Monday, Aburizal, more popularly called Ical, however, warned that if the program failed and the price of the oil in the international market stays at the current level of US$60 per barrel, the fuel subsidy would skyrocket to Rp 150 trillion, or 30 percent of the this year's state budget.

Providing fuel subsidy of to Rp 150 trillion would be beyond the financial capacity of the government. "It would be more useful if the fuel subsidy is given directly to the needy. For example, a poor family is given a subsidy of Rp 2.5 million to buy kerosene," he added.

According to the coordinating minister, the government is considering to provide a direct subsidy in solving the high fuel subsidy spending.

Aburizal said that there were only two alternatives that have to be taken to come out of the dilemma. "Raising the subsidy with the risk of spending more money from the state budget or raising the fuel price," he said, adding that if the latter option was taken, the fuel subsidy could be given directly to the needy people.

President Bambang Susilso Yudhoyono introduced a fuel saving program last week, requiring all the government's offices to cut down their fuel consumption. Also as part of the saving energy program, the President also authorized the provincial governments to carry out a fuel saving program in their respective provinces. (*)