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Luxury Cars Face Subsidized Fuel Ban

Published: September 11, 2012 | 7:10 am
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Downstream oil and gas regulator BPH Migas plans to ban luxury cars in Jakarta from consuming subsidized fuel, a senior official at the regulatory body says.

Djoko Iswanto, a director at BPH Migas responsible for oil fuel, said the change aimed to curb the capital’s high consumption of subsidized fuels.

“A regulation that bans luxury cars from consuming subsidized fuel will be released and … be effective in September,” Djoko said on Sunday.

Djoko’s comments came after state-controlled energy company Pertamina released data showing that as of Aug. 30, Jakartans had used 1.41 million kiloliters of subsidized fuel this year, exceeding its eight-month quota.

For January to August, the quota was set at 1.03 million kiloliters.

Pertamina forecast Jakarta would use its total annual quota of subsidized fuel by Saturday.

However, Rudi Rubiandini, the deputy minister for energy and mineral resources, said any policy that bans private car owners — even those who own luxury cars — from consuming subsidized fuel was almost impossible to enforce.

Rudi said monitor the implementation of such measures was complicated for the government. “All of these are just proposals,” he said.

Djoko said he regretted the choice of some luxury car owners to buy Premium, the subsidized low-octane fuel, despite the manufacturers’ recommendations that owners use a higher-octane fuel.

BPH Migas is now studying the definition of luxury cars.

“We will seek input from the Association of Indonesian Automotive Manufacturers [Gaikindo] as well as Pertamina. On Wednesday, we will invite them to give input on what kind of cars are defined as luxury ones,” Djoko said.

He added that Jakarta was a priority and if it worked, the program would be extended to other cities.

Djoko said that such a plan would not require the approval of the House of Representatives, according to a presidential decree issued earlier this year, as BPH Migas has the authority to impose rules on the distribution of specific fuels to consumers.

Since July 1 Indonesia has banned the operational vehicles of government-related agencies from using subsidized fuel. On Sept. 1, the decree was also used by the Energy and Mineral Resources Ministry to legitimize a ban on subsidized fuel use for the operational vehicles of mining and plantation companies.

On Monday, the Energy and Mineral Resources Ministry proposed to the House of Representatives that it increase by 4 million kiloliters the national quota for subsidized fuels, including Premium, diesel and kerosene, which is set at 40 million kiloliters this year.

Any change in quota will impact spending on the fuel subsidy, which consumes a large share of the nation’s budget.

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