President Joko Widodo and the First Lady depart for Beijing on Nov. 8. (Antara Photo/Andika Wahyu)Jakarta. President Joko Widodo may announce an expected hike in the price of subsidized fuel as soon as Sunday, when he returns from Brisbane, Australia, where he is attending the Group of 20 Leaders’ Summit.
Vice President Jusuf Kalla said in Jakarta on Friday that Joko would no longer delay the increase in the price of subsidized diesel and low-octane gasoline, which the administration says will be done before the end of the year.
“Yes, it needs to be done sooner. God willing, it will be announced as soon as Jokowi arrives from Australia in order to prevent any uncertainty,” Kalla said.
Joko will return home on Sunday from a visit encompassing China, Myanmar and Australia — his first overseas trip as president.
Kalla said the government would recalculate the size of the fuel subsidy cut to account for the decline in the world oil price to around $80 per barrel, and the rupiah’s depreciation that has made fuel imports more costly.
“We have to recalculate because [of] the [falling] price of oil. We will calculate the combination of the percentage we can maintain due to the oil price decline and that due to the rupiah depreciation,” the vice president said.
Kalla also denied that the government’s inability to give a firm date for the fuel price increase had contributed to inflation, particularly for food items. Instead, he attributed the higher costs to the weakening rupiah and the extended dry season affecting crop harvests.
The government’s plan to cut fuel subsidies has been met with mixed reactions, with some approving the move with reservations and others opposing it.
Ahmad Safrudin, executive director of the Committee to Phase Out Leaded Gasoline (KPBB), said the government should improve the quality of the fuel before raising its price.
“If [the government] wants to adjust the price of subsidized fuel, I think they should improve the quality first. We’re still adopting the international price on the Singapore commodity exchange as the benchmark, but have failed to also adopt the quality standards,” he said.
Safrudin said the benchmark price referred to 92-octane gasoline, but the Indonesian government was applying it to the lower-quality 88-octane fuel.
He said there were 14 other parameters used to determine the price of oil based on its quality, which should make the price of the 88-octane lower than at present.
“You have to be fair: if you want to use the international price, it should also follow the quality. If the benchmark price adopts the 92-octane quality, the quality of the subsidized fuel given to the people should also be of the same class,” he said.
Safrudin said that improved subsidized fuel quality would help reduce consumption and cut emissions.
“Vehicles that use 92-octane fuel can save up to 10 percent [fuel] than vehicles that use 88-octane [fuel],” he said.
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