Government Considers Changing Fuel and Elpiji Subsidy Schemes All

JAKARTA, KOMPAS.com – The government is considering changing the scheme for distributing subsidized fuel oil (BBM) and LPG. If currently it is still using a subsidy scheme for goods, it will be changed to a subsidy scheme for people or a closed system.

Main Expert Staff of the Presidential Staff Office of the Republic of Indonesia, Edy Priyono, said that the plan to change the subsidy scheme is aimed at ensuring that the distribution is right on target.

“The government is considering transforming the subsidy scheme, from subsidies to goods to subsidies for people or a closed system. In order to be more targeted, only those who are poor or vulnerable to poverty will enjoy it,” he said in a written statement quoted on Friday (27/5/2022). .

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According to him, with an open subsidy scheme like the current one, it is feared that the volume of subsidies could become unlimited, because people who should not be included in the subsidy recipient category, namely not poor or vulnerable to poverty, actually enjoy it.

Regarding the implementation of the transformation of the energy subsidy scheme, Edy said, it will be adjusted over time, especially considering the current economic conditions. The government is also still waiting for the readiness of the Integrated Social Welfare Data (DTKS).

“This is to attract people who are entitled to subsidies and not to interfere with their purchasing power,” he said.

The government noted that until April 2022, the realization of state spending for fuel subsidy and LPG reached Rp 34.8 trillion. This amount is 50 percent higher than the same period in 2021 which amounted to IDR 23.3 trillion.

Meanwhile, the Ministry of Finance has proposed additional subsidies and energy compensation for 2022 amounting to Rp. 291 trillion to the Indonesian House of Representatives, so that it becomes Rp. 443.6 trillion from the initial allocation of Rp. 152.5 trillion. This proposal has been approved by the DPR RI.

Specifically, the energy subsidy budget was added to Rp 74.9 trillion, from Rp 134 trillion to Rp 208.9 trillion. Consisting of additional subsidies for fuel and LPG of IDR 71.8 trillion, as well as electricity subsidies of IDR 3.1 trillion.

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Meanwhile, specifically for energy compensation, the budget for energy compensation increased by Rp. 216.1 trillion, from Rp. 18.5 trillion to Rp. 234.6 trillion. Consisting of additional fuel compensation of Rp 194.7 trillion, which includes diesel fuel of Rp 80 trillion and Pertalite of Rp 114.7 trillion, as well as additional electricity compensation of Rp 21.4 trillion.

Edy said that the increase in fuel and LPG subsidies was the impact of high energy commodity prices in the global market, especially crude oil and gas. This is because most of Indonesia’s energy needs are still met from imports.

“We still import a lot of oil and gas, so when the purchase price goes up and we want to maintain the price, the subsidy must increase,” he said.

He said the government had decided to maintain the selling price of Pertalite and 3 kilograms of LPG in the market. This is done to maintain people’s purchasing power in the midst of rising commodity prices, the impact of global uncertainty.

According to him, the government could actually revoke the subsidy and release the Pertalite type fuel and 3 kilograms of LPG at an economic price in order to maintain the stability of the State Revenue and Expenditure Budget (APBN).

However, this option was not chosen and the government actually increased the budget for energy subsidies. Therefore, he stressed, it is necessary to transform the subsidy scheme to a closed system so that the distribution is right on target.

“Actually, it is realized that many energy subsidies, especially LPG, are not well targeted, because they are mostly enjoyed by the upper-middle class,” he said.

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