USE OF SUBSIDIZED FUEL EXCEEDS QUOTA

In accordance with Law no. 22/2010 on oil and natural gas, the Government is obliged to ensure procurement and distribution of oil fuel, which are vital commodities for the people in all of Indonesia.

The implementation of such commitment is by properly maintaining quota for subsidized fuel. Realization of the average volume of subsidized fuel in 2010 already exceeded the agreed quota.

Realization of the average distribution of subsidized fuel in 2010 have so far exceeded the stipulated quota, i.e. around 9% to 10%, the Minister of Energy and Mineral Resources stated during a technical meeting with Commission VII of House, Monday (7/6).

Due to limited state’s budget foe allocating the plan of fuel subsidizing, it is necessary to gradually reduce and control distribution of subsidized fuel in tandem with on target subsidizing.

In the State Budget, the volume of subsidized fuel is set at 36,504,775 kiloliters. Unless properly controlled, the volume will swell to 40,100 kiloliters. In 2009 the quota for subsidized fuel was stipulated at 36,854,448 kiloliters of which 37,837,611 kiloliters was realized.

To minimize use of subsidized fuel, the Government plans to take the following measures scheming up regulations in relation to reduction of subsidy according to the present condition, among others through revision of Regulation Perpres no 55/2005 and Perpres 2006 on selling price of domestic fuel, informing the public on enhancing fuel efficiency through print and electronic media, obligation to use fuel according to mandatory rules.

Further steps would be to allocate certain types of fuel certain consumers by closed distribution and maintain coordination with related institutions.

Other measures taken would be to reduce subsidy for certain types of fuel by transforming price subsidy to social aid like enhancing efforts of reducing poverty, the execution of which will be coordinated with the National Planning Board (BAPENAS). To reduce total volume of fuel, the Government would I minimize use of certain types of fuel, diversify energy, and apply closed distribution system for certain category of users.