State Saves Rp30 Trillion From LPG Subsidy
Friday, 05 May, 2006 | 16:15 WIB

Tempo Interactive, Jakarta: The government estimates there will be Rp30 trillion economizing, if the oil subsidy is transferred to liquefied petroleum gas (LPG).

According to the State Minister of National Development Planning concurrently Head of the National Development Planning Agency (Bappenas), Paskah Suzetta, the oil subsidy transfer to LPG can significantly reduce the oil subsidy budget in the State Budget and Government Expenses (APBN). In addition, long term petroleum resources can be more economical.

He explained, if this energy diversification is successful, the state can save around Rp30 trillion per year. “For an illustration, if the diversification is carried out quickly, the oil subsidy budget of Rp54 trillion this year would only be Rp24 trillion,” Paskah told the press yesterday.

In his opinion, alternative energy sources in this country are abundant and have not been utilized optimally. For that reason, high-quality infrastructure is necessary to make use of alternative energy such as LPG. The government must have the courage to spend a large amount of capital to prepare the infrastructure needed.

He estimates, the government only needs to spend US$5 billion. In five years, the state can save US$15 billion or US$3 billion per year.

Paskah said the idea has been discussed in a Cabinet meeting and will be realized soon. “We hope next year there is an economizing movement through energy diversification.”

The government plan is to withhold subsidies by providing gas cylinders and stoves for society. However, it is promised that gas cylinders and stove prices will be minimized.

The Special Staff for the Coordinating Minister for the Economy, M. Ikhsan, said the government is indeed promoting the use of LPG because its subsidy is less than kerosene’s. “LPG’s subsidy only needs around Rp6 trillion, while kerosene requires Rp40 trillion,” said M. Ikhsan.

So the government plans to subsidize gas cylinders. If this is successful, the kerosene price will depend on the market price. “It must be free, but not now. We encourage it naturally first, then slowly it can be free.”

Agus Supriyanto and Yudha Setiawan
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