Indonesia
The scarcity of subsidized oil-based fuel cannot be partially solved. The appeal to save fuel will not settle the problem.
The boycott of coal delivery from Kalimantan is being seen as an impact of the failure of the government and the House of Representatives (DPR) in settling the issue of fuel subsidies. Delaying fuel price increase proves to create a new problem. The policy of courtesy that seemingly makes people pleased has turned out to pose trouble to the public at large. The coal supply blockade has threatened power generation on Java Island.
This consequence was never calculated by those opposing the fuel price rise. They obviously did not anticipate the potential for chaos everywhere. In Kalimantan, diesel oil and gasoline supply shortage forced residents to queue up for 2 kilometers. The governors from all of Kalimantan threatened to stop the delivery of coal to other islands. As a climax, on May 26, the residents were enraged and blockaded barges carrying coal into the Barito River with outboard-motored boats. The situation would have been more serious if the blockade had lasted more than one day.
The situation would have unnecessarily become worse if the DPR politicians had not clamored against the increase in subsidized fuel prices. The fuel price hike would make the subsidized fuel quota in the Amended State Budget of Income and Expenditure (APBN-P) for 2012 not necessarily as high as it is now 40 million kiloliters. Still, people outside Java are already accustomed to buying more expensive fuel. The main problem in non-Java areas is uncertain fuel supply.
Putting off price increases is equal to setting a time bomb. When the Indonesian crude oil price soars above the assumption in APBN-P 2012 US$90 per barrel an 'explosion' of subsidies will drain the state treasury.
It will also be calamitous if the government tolerates higher gasoline and diesel oil consumption. Fuel scarcity, especially in Kalimantan, may be inevitable, because the economic growth in the region is indeed above the national growth rate. In South Kalimantan, for instance, the number of motor vehicles annually rises by 15.5 percent. But this should not give reason to all-Kalimantan governors to request any additional subsidized fuel quota.
Regrettably, Energy and Mineral Resources Minister Jero Wacik has allowed a 5 percent subsidized fuel quota increase in Kalimantan. This move poses some danger because the Kalimantan governors' threat can be emulated by other provinces. If this happens, economic and political stability will be shaken.
The governors should have helped find a solution instead of creating another problem. Regional chiefs are obliged to assist the central government in limiting subsidized fuel consumption by banning official cars from using subsidized gasoline and diesel oil. The same rule should also be applied to trucks and barges transporting coal. So far, some coal companies have covertly avoided buying industrial diesel oil, which is more expensive than subsidized diesel oil. Other coal companies adopt the tactic of outsourcing by hiring people's means of conveyance which allows them to buy subsidized diesel oil.
It is necessary to strictly monitor the use of subsidized fuel only by ordinary people. This measure of control is far more important than mere appeals, which have been made by the government without satisfactory results. The public is fed up with the rhetoric of saving fuel. The government suggests gas consumption, but not many gas pump stations have been built. Energy diversification takes a long time. The most important decision now is one concrete action: raise fuel prices.
Tempo
No. 41/12, June 10, 2012
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