TAMBANG, January 30, 2013 | 04.51
Should Subsidized-Fuel Price Increase?

Jakarta - TAMBANG. Kurtubi, an expert observer of oil and gas, revealed that subsidized-fuel (also known as Premium Gasoline) price should have been increased, so the government can earn additional fund to build numerous infrastructure. The above statement was said in a National Seminar “Subsidized Premium Out of Stock: Price Increase in 2013”, held by Indonesia Raya Students Movement (Parindra in its Indonesian abbreviation), held at Gedung Dewn Pers, Jakarta, on 29 January 2013.

According to Kurtubi, it would be better for the government to raise the gasoline price, rather than enacting a quota system on subsidized-fuel consumption policy.

“We can only imagine how people would get in line for hours, and by the time their number is up, the subsidized fuel has run out,” he described.

Additionally, he criticized the National Economic Committee who suggested the prohibition for private vehicle to use subsidized-fuel. He calculated that the plan would be equal to raise the subsidized-fuel price by more than 100%. He also opposed the government plan to use some kind of IT system to control subsidized-fuel consumption, since the method would cost greatly and would become ineffective when the subsidized-fuel price increases.

Kurtubi further explained that numerous factors has influenced the oil police, such as the very low oil production/lifting, stagnant capacity of oil refinery, increasing fuel consumption, increasing oil import, and the soaring amount of subsidized-fuel cost. Based on those factors, Kurtubi alleged that the government has mismanaged the national oil & gas policy. Consequently, Indonesia has been an oil importer while still having a relatively large resource of oil.

The mismanagement goes back to the Oil & Gas Law (Law No. 22 / 2001). As an example, Kurtubi pointed out to Article 31 Paragraph 1 and 2, which he claimed to have hindered the investment climate in oil & gas investment, with tax obligation imposed to exploration companies prior to production.

Besides the slow development in exploration investment, oil refinery capacity has also been stagnant. Pertamina, for example, has continuously stayed under the same capacity of refinery for years because it would require billions of dollars of investment to build a new refinery, without a potential profit earned. Kurtubi argued that Pertamina, as a state owned enterprise, should not base its calculation as a profit oriented entity.

Meanwhile, Marwan Batubara, Director of Indonesia Resources Studies (IRESS), has a different reason to support his opinion that the fuel price should be increased. He stated that the demand for fuel will continue to grow, following the economic growth and inflation number. “Imagine how other prices keep crawling up, while fuel price remains the same,” he illustrated.

He further stated that oil & gas policy should not be mixed up with politics, as what has been practiced up to now. He accused that the president has been paying more attention to his political image, rather than considering on the national energy resilience. []