Government offers three options of fuel restriction

Minister of Energy and Mineral Resources Darwin Z. Saleh said a government-sanctioned study conducted by a consortium of state universities had recommended three options of subsidized fuel policy, all of which will be submitted to the House of Representatives? Commission VII for deliberation today.

The first option is to increase the price of Premium subsidized gasoline to Rp 5,000 per liter with cash back worth Rp 500 for public transportation. The second option maintains the current price of Rp 4,500/liter only for motorcycles and public transportation, while private cars have to consume Pertamax high-octane gasoline at a maximum price of Rp 8,000 per liter. The third option is to maintain the current price of Rp 4,500/liter only for motorcycles and public transportation, while the price for private cars is set at Rp 5,500 per liter. But if the quota of subsidized fuel runs out the price will be set at Rp 5,500 per liter for all.

The government said it would cut fuel subsidy by Rp 7.3 trillion if the first option is chosen and Rp 5.86 trillion and Rp 8.6 trillion if the second and third options are picked respectively.

The first option will not result in a significant decline of subsidized fuel, but the second and third options will cut the volume of subsidized fuel by 3.2 million kiloliters.

The government has found the first and second option will increase inflation rate by 0.32 percent, while the third option will give a rise to inflation rate by only 0.22 percent.

Minor investment will be needed for the first option to procure a cash back technology, while the second option requires huge investment to add gas station infrastructure. The third option needs very high investment.

"All the options deem regulation of subsidized fuel is effective,? said Darwin.

But Darwin said the best option would be to make Premium consumers shift to Pertamax or set a quota for Premium use that will save fuel subsidy. The third option, however, will require investment for radio frequency identification to recognize private cars.

In response to the first option, the government deems the potentials of the fuel subsidy consumption to exceed the quota and misplaced distribution of subsidized fuel remain there. Implementation of cash back also needs a reliable telecommunication network, therefore it takes time. The government, Darwin said, insists that subsidized fuel price be maintained.

The second option is considered favorable for the campaign for efficient and green energy as private car owners will either move to Pertamax or do not drive their cars. But capping the Pertamax price is deemed as inappropriate. The government needs alternative fuel whose price is below Pertamax.

Darwin said the third option would require a study on implementation of radio frequency identification technology.

The government suggested another delay to the implementation of subsidized fuel restriction "We need to prevent excess of quota and to improve supervision by enhancing the institution and familiarization program and preparing supporting facilities and to develop alternative fuels,? Darwin said. (godang)