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May Day May Prove Expensive

Government Moves to Make Consumers Pay More For Gas When Fueling a Vehicle with an Engine of More than 1,500 cubic Centimeters Starting May 1, 2012

(4/22/2012) Unable to sustain the massive burden of fuel subsidies, Indonesia is poised to take remedial steps to curb the use of subsidized premium fuel sold at Pertamina filling stations across the nation.

The government has announced its intentions to compel all vehicles with engines of 1,500 cubic centimeters or more to purchase non-subsidized Pertamax fuel sold at a cost of more than twice that of the subsidized premium gas.

The State News Agency Antara, quotes M.S. Hidayat, the Minister of Industry, saying: “The government will restrict subsidized fuel for cars with engines of 1,500 cubic centimeters or more."

This program will begin on May 1, 2012 withdetails announced via various regulations issued by the Ministers of Energy and Natural Resources, Industry and Transportation.

Hidayat confirmed that cars with engines of more than 1,500 cubic centimeters would be required to buy non-subsidized Pertamax fuel.

The heads of everal organizations have called on the government to urgently and completely socialize any change in how gas will be sold and distributed.

Meanwhile, critiques of the government question the viability of the new policy in places like Bali, where only 50% of all gas stations carry non-subsidized Pertamax fuel and question how the government will effectively bar the public from purchasing the cheaper, subsidized premium fuel.