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Fuel Price Increase Postponed

Government to Delay Restrictions on the Sale of Subsidized Premium Fuel Until August or September

(4/27/2012) Indonesia’s Coordinating Minister for the Economy, Hatta Rajasa, has confirmed that steps to limit the consumption of non-subsidized premium gasoline for private vehicles will not be introduced on May 1, 2012, as originally announced.

As reported by Balidiscovery.com [See: May Day May Prove Expensive] the government originally intended that all private vehicles with engine capacities greater than 1,500 cubic centimeters would be required to by non-subsidized Pertamax fuel on May 1st.

As reported by Bali Post, Hatta says the government must still make proper preparations and socialize to the people the coming change in fuel policy.

In the end, Hatta explained, steps must be take to reduce the consumption of subsidized fuel to keep the amount of subsidized fuel in 2012 below 40 million kiloliters. Hatta warms: “If there is not a policy and if there is not control, then the energy subsidy will reach Rp. 340 trillion (US$37.8 billion). This will in turn push the budget deficit above 3 percent.”

Hatta said of equal importance in preparing for the new fuel policy was determining which vehicles will still be allowed to purchase subsidized premium fuel. He suggested that one system under consideration is the use of stickers.

The coordinating minister explained that the government would not be reckless in their preparations for the reduction in the use of subsidized fuels.

The director-general of Oil and Gas from the Ministry of Energy and Natural Resources, Evita Hernawati Legowo, explained that the elimination of the fuel subsidy for cars with engines greater than 1,500 cubic centimeters would be introduced in stages.

Legowo said the policy for private vehicles would come into effect around August-September 2012. The new policy will be introduced in the Jakarta metropolitan area (Jabodetabek) first.