In the face of protests from lawmakers and analysts, President Susilo Bambang Yudhoyono Monday postponed a plan to limit public fuel consumption until further studies could be undertaken to measure its effectiveness.
Despite expectations that fuel subsidies will be increased substantially this year due to higher world oil prices and increased fuel consumption, Yudhoyono sees no immediate need to impose the agenda of fuel in May as proposed by officials of energy agencies.
"The President has told us not to the imposition of a hurry with the program until it is safe, the program will be implemented in line with the plan," Energy and Mineral Resources Minister Purnomo Yusgiantoro told reporters after a Cabinet meeting .
The Cabinet meeting aims at the establishment of a date for the program and its customer base.
Purnomo said that the President had required the agencies related to the institute several procedures before imposing the program, which will include a preliminary trial, a pilot project, evaluation, and a public awareness campaign.
"We are still preparing these procedures. That's why we can not reach an exact time for the program," he said.
With world oil prices hovering above $ 90 Per barrel, the coffers are already being diverted for subsidies on fuel and electricity.
The government was forced to double the grant for this year's state budget revision to 106.2 billion rupees (11.4 million USD), compared to 45.87 billion rupees in the budget State's original 2008.
Assumptions for calculating the grant proposal was based on the fuel consumption of 35475 million kilolitros, global oil prices of 83 dollars per barrel, and an exchange rate of 9150 rupees per US dollar.
The largest grant is expected to drain funds that were used to build infrastructure, schools and other public needs, as well as limiting the ability of the State to expand businesses, as they are forced to pay big dividends to the Government.
While the state budget is likely to be overwhelmed, analysts believe that the agenda of fuel Yudhoyono would be the only saviour for preventing raise fuel prices to ease the burden of subsidies.
The hiking fuel prices could present problems for Yudhoyono before the general elections in 2009.
President of the downstream oil and gas regulator BPHMigas Tubagus Haryono said that the program only save 10 billion rupees in subsidies, while its social impact could be much greater.
Under the program, the government issued a "control card kerosene" to low-income households throughout the country, with each household limited to 12.5 litres per month.
The government also intends to distribute a smart card to limit fuel consumption subsidized by motorists in Java and Bali. With the card, a car and a motorcycle can only consume 1 liter and 5 liters of fuel per day, respectively.
The plan has recently drawn a wave of protests from legislators and analysts who believe that the system can trigger social unrest because the allocation is so small that consumers will have to find ways to work around it.
The programme will also create loopholes for graft, they say, because the monitoring system remains unclear, particularly in the procurement and distribution of fuel by agents under the programme.
from thejakartapost.com
