Govt to cut subsidized fuel distribution cost

The government will cut the distribution costs of subsidized fuels payable to state oil and gas company PT Pertamina from 13.5 percent to 12 percent as part of the government?s efforts to slash fuel subsidy up to Rp 10 trillion (1US$=9,200), Media Indonesia reported Saturday.

The distribution of subsidized fuels is still handled by Pertamina for which the firm is entitled to receive "distribution costs", which include fees.

Adi Subagyo, a spokesman for Downstream Oil and Gas Regulatory Body BPH Migas, said in Jakarta Friday that the government?s move to cut the distribution costs was part of the four scenarios to trim fuel subsidy.

The three other scenarios are the conversion of the use of kerosene to liquefied petroleum gas (LPG), the application of close kerosene distribution system using control cards, and the obligation to use smart card for private vehicles to limit the use of subsidized premium gasoline and diesel.

According to him, the decision was the result of a meeting with the Ministry of Finance several days ago. (*)