Govt, House agree on amount of subsidized fuels

By Godang Sitompul

The Ministry of Energy and Mineral Resources and the House of Representatives? Commission VII in charge of energy affairs reached agreement on Wednesday on the amount of diesel oil, LPG, and kerosene that will get government subsidies next year.

The working meeting was part of a series of meetings between the ministry and the Commission to discussion assumptions for the 2016 State Budget.

The amount of subsidized diesel oil was set at 16-18 million kl, higher than the government proposal of 16.82-17.22 million kl. Meanwhile, the amount of subsidized LPG was set at 6.5-6.65 million tons, as against the government?s proposal of 6.602 million tons; and kerosene at 0.7 million kl.

The government has scrapped subsidy for Premium gasoline since late last year, but still provides it for diesel oil on the grounds that the type of fuel is needed by poor fishermen.

The government provides subsidy for LPG sold in 3-kg canisters, which is mostly used by small business and poor people, but no subsidy for the fuel sold in 12-kg canisters. During the meeting, the ministry said in order to prevent the public from abusing subsidy for 3-kg LPG, the government will try a new way of providing the subsidy: The subsidy will be directly rendered to buyers rather providing buyers with cheap LPG. The new method will be first implemented in Batam, Bali and Tarakan on trial basis.

Furthermore, the government will launch the kerosene-to-LPG conversion program in Sumbawa, Maluku and Sulawesi.

With regards LGV, the ministry and the Commission agreed to provide Rp 1,500 per liter in subsidy. The LGV sale is projected at 4,294 kl next year.

Editing by Johannes Simbolon