Senior Economist Faisal Basri assessing the government is too pampering the sector energy which only some people enjoy. On the other hand, people’s stomachs are not pampered.
This can be seen from the chaotic prices and stocks of domestic cooking oil in recent times. The price of cooking oil has soared to reach Rp. 20,000 per liter and stocks are scarce in the market.
“Now the government prioritizes energy, the stomach is behind. Energy is pampered, the stomach is not pampered. In fact, energy is only enjoyed by a few people,” said Faisal in the Webinar: Rare Cooking Oil, What’s Up?, Wednesday (16/2).
He explained that there was a shift in crude palm oil consumption (crude palm oil/CPO) in the country. According to Faisal, more than 50 percent of local CPO production was absorbed by the food industry including cooking oil producers in 2019.
“But over time it will decrease, so that 2022 is estimated to be below 50 percent (absorption of CPO by the food industry from total production),” added Faisal.
Currently, most of the CPO is sold to the biodiesel industry. Its composition is even estimated to be almost 50 percent by 2022.
“Previously the absorption of the biodiesel industry was only 34.5 percent in 2019, it was estimated at 43 percent in 2022. So the biodiesel industry is almost the same as the food industry,” explained Faisal.
The increase in CPO consumption in the biodiesel industry is due to the obligation to mix 20 percent biodiesel (B20) with 80 percent of diesel fuel which produces B20 biodiesel products. This program has been running since January 2016.
“Because there is an obligation, their consumption (of the biodiesel industry towards CPO) increases,” added Faisal.
In addition, there are subsidies to the biodiesel or biofuel industry of up to Rp. 100 trillion from 2015 to December 2021. Faisal said the subsidies were disbursed so that companies would not lose money.
The subsidy is provided through the Palm Oil Plantation Fund Management Agency (BPDPKS). The subsidies are distributed because the government guarantees that biodiesel companies will not lose money because subsidies are disbursed if the domestic benchmark price is lower than the international price.
On the other hand, if CPO is sold to a cooking oil factory, there is no such incentive.
“The government guarantees that the biofuel industry will not lose money, it is guaranteed, but the cooking oil company will not,” said Faisal.
With such a policy, CPO entrepreneurs prefer to sell their products to the biodiesel industry rather than cooking oil companies.
“If upstream is not resolved, then scarcity will continue to occur,” added Faisal.
According to Faisal, the government through BPDPKS has indeed provided subsidies of around Rp. 7 trillion for cooking oil companies so that they can sell at a price of Rp. 14,000 per liter. However, if the subsidy funds run out, it should be added, not just stopped.
“If there is another subsidy, it is not possible to ask entrepreneurs to sell oil for Rp. 14 thousand per liter, and they cannot ask companies to sell Rp. 14 thousand,” said Faisal.
He emphasized that the government cannot make policies that make companies lose money. This is contrary to the law regarding limited liability companies (PT).
“The subsidy from the palm oil fund could be more than Rp. 100 trillion to biodiesel companies, to the people of only Rp. 7 trillion more,” explained Faisal.
(aud/sfr)
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