Thursday, 18 December 2014


Consumers, especially vehicle owners in Indonesia, who consume oil fuel (BBM) based on MOPS (Mid Oil Plats Singapore) price reference, were made ambiguous by the pricing of Premium gasoline of RON 88 quality. Premium prices were increased from IDR 6,500 and to IDR 8,500.

RON quality, for example, 70 percent of MOPS price, the quality is till lower. The benchmark price is not on par with the categorized quality, ranging from scale 1 (one) to 4 (four). This scale showed the level number which is parallel to quality. For example, Pertamax and Pertamax Plus and Agric-Dex of WWFC category 2. “International prices in Singapore, 121 barrels are equivalent to IDR 8.754 per liter. That is our proposal. 70 percent of the COGS (cost of goods sold), after calculated, could determined the price of COGS,” Executive Director of the Committee on the Elimination of Leaded Gasoline (KPBB), Safrudin Ahmad, told Business News (November 18).

The government once planned to implement COGS of IDR 9,000, while the national capacity is only around 70 percent of RON 88 premium gasoline. Consequently, the government has to import to cover the 30 percent demand. Prices at the national level were pegged at 30 percent import price. The benchmark price is not accompanied with quality scale ranging from 1 to 4. Premium gasoline price is increased. Actually, this is not in the context of price increase, but subsidies which were paid by the people. In this chaotic condition, oil traders take advantage of the situation.

They easily control and regulate national prices. Oil traders are also allowed to distribute low quality fuel. You can get RON 92 fuel at a price below IDR 9,000. Oil traders were playing by stealing quality. The government should only set one price. It would be easier.”

KPBB hoped the government to issue regulations on the stipulation of new standards of vehicle emission. Because the old emission standards have been detrimental to the state, both in terms of wastage of fuel subsidy that continues to burden the state budget as well as air pollution.

Application of fuel economy standards will bring positive effects to the nation. Benefits are likely to multiply, namely increase of energy security and reduction of fuel subsidies. Another advantage is that it could reduce air pollution and greenhouse gas emissions that would continue to decline.”

In recent years, the national energy demand continues to rise sharply with the transport sector as a second user of fuel after industry. In this case, fuel still dominates the demand. As a result, from year to year, the government continues to improve fuel subsidy budget, and in 2013 the budget reached IDR 195 trillion. Nevertheless, the government’s efforts are sufficient to reduce fuel consumption by the transport sector. It can be seen from the absence of government regulation to stipulate fuel economy standards to be applied in Indonesia.

Fuel economy is a term used to describe the calculation of fuel consumed by vehicles and indicated in kilometers per liter unit. The more distance that can be travelled the better the fuel economy is. Currently fuel economy becomes a central issue in the midst of soaring fuel prices.

The state bears a great burden of subsides. Energy abatement needs to be addressed with strategic measures. If specified, the policy for the implementation of new standards of vehicles emission will be followed by design of technology which is the largest contributor to air pollution in urban areas.

Global conditions, there is a 50 by 50. That is, in 2050 we have to cut oil consumption by 50 percent per capita of today energy consumption. It means that Indonesia must play an active role in encouraging this issue, with the motivation that corresponds to the current state of the nation, that is to reduce subsidies which continue to increase every year.

These efforts can be continued by adopting Euro 4 standard. He believes that the application of this standard in 2021 can bring Net Economic Benefit of up to IDR 1970 trillion in the form of health costs, production saving and fuel subsidy saving for 2005-2030. Meanwhile, if the Euro 4 standards are implemented in 2016, the Net Economic Benefit can reach IDR 3,973 trillion in the same period.

Delayed adoption of vehicle technology could reduce the competitiveness of the national automotive industry in the Southeast Asian market. We know that the market leader in ASEAN is Thailand in 2002 because we were late in adopting the Euro 2 standards.

On the other hand, Yetty Rusli, Expert Staff to the Ministry of Environment added that the government needs to make a greater breakthrough is in the form of increasing the utilization of biomass energy derived from our own natural resources and from sources that can be reproduced.

“We have the solar energy and trees as a source of energy. These all are energy which utilization can be increased to reduce the national fuel consumption. We know that what happened in this country is as a result of fossil energy. Therefore, we could exploit the energy derived from our natural resources, “Yetty told Business News (November 18). (E)  

Business News - November 19, 2014

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