Govt to limit subsidized kerosene sales in April

The government will go ahead with its plan to limit the use of subsidized kerosene by households this April, after securing key approval from the lawmakers on Wednesday.

Airlangga Hartarto, the head of the Commission VII that oversees energy and mineral resources at the House of Representatives, recommended the government implement the policy as soon as possible to avoid more losses on the government side for subsidizing the fuel.

Tubagus Haryono, the chairman of downstream oil and gas regulator BPH Migas, told the hearing that the government would at first limit the sales of kerosene set a consumption quota for low-income households in the areas of Java and Bali, which total 9.5 million.

Under the plan, the quota for each household is set at 12.5 liter a month.

The government will monitor the consumption of kerosene in households by using a control card, which will be distributed to every family.

The card would be required with each purchase of kerosene. ?We will introduce and familiarize the program to the public early this March,? Tubagus said as quoted by Jakarta Post.

A monitoring agency will be set up to coordinate with local governments in each region to avoid misuses in the distribution of the subsidized kerosene.

With this plan, the government is hoping to save Rp 1.09 trillion (US$119 million) of the state?s subsidy spending this year.

The government has set a quota of 7.5 million kiloliters for subsidized kerosene in 2008 at a cost of Rp 24.2 trillion.

However, with the surge in the global oil price, this year?s subsidy spending for kerosene is expected to swell into Rp 34.8 trillion.

With the global oil prices soaring to more than $100 a barrel currently, the market price of kerosene is almost Rp 9,000 (63 U.S. cents) per liter, while subsidized kerosene is sold at Hp 2,400 per liter.

BPH Migas' member Ibrahim Hasyim said even though the program would target Java and Bali, the agency would very likely apply the program first in Central Java because - unlike other provinces in Java and Bali - most locations had yet to carry out the government?s kerosene LPG conversion program.

The conversion program aimed at reducing the consumption of subsidized kerosene, was introduced last year. (*)