Indonesia to use IT to help curb subsidized fuel sales

A new IT system to monitor quotas is the government's latest attempt to help it limit the costs of fuel subsidies for cars in Indonesia, which is eating away state funds.
Written by Jamie Yap, Contributor on

The Indonesian government will implement an IT system this July in hopes that it will help limit the costs of fuel subsidies for cars in the country, which has been draining state funds and resources.

Edy Hermantoro, oil and gas chief at the Energy and Mineral Resources Ministry, said a trial of the new system will be carried out in Greater Jakarta only, because that region had the largest gasoline consumer in the Indonesian archipelago, The Jakarta Post reported Saturday.

Indonesia is finding ways to help it limit the costs of fuel subsidies.

"With the new policy, drivers may purchase subsidized gasoline but only a certain amount. For example, they may not buy more fuel on the same day after purchasing 30 liters of gasoline," he said.

The government will see whether the new IT system is accepted by locals in Jakarta before expanding it to other regions in Indonesia, he added.

Edy said state-owned oil and gas company Pertamina was still considering between PT Telekomunikasi Indonesia (Telkom) and PT Industri Telekomunikasi Indonesia (INTI) to provide the IT system. The two telecommunications companies were the last tender participants out of 16 candidates, he said.

The new IT system is the latest effort by the Indonesian government is struggling to limit subsidized fuel sales. The government has been campaigning to bar owners of private motor vehicles, especially those above 1,500 cc engines, from buying subsidized gasoline, since gas station attendants cannot do much to prevent such sales, the report said.

The government expects subsidized fuel consumption this year to reach 48.39 million kiloliters, which is 2.38 kiloliters above the 2013 state budget target of 46.01 million kiloliters, the report added.

The news comes in light of comments by Chairul Tanjung, chairman of Indonesian President Susilo Bambang Yudhoyono's main economic advisory group, who said in a Reuters report that a nationwide ban should be imposed on use of subsidized fuel by the country's 11 million private cars. This, he said, would save the government US$8.6 billion in 2013 as well as remove a widening fiscal deficit.

Fuel subsidy costs currently account for more than 30 percent of state spending, draining funds that could be used for much-needed infrastructure in the country, Reuters noted.

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