Pertalite Fuel Oil Quota Will End at the End of September

Finance Minister, Sri Mulyani

The Minister of Finance of Indonesia, Sri Mulyani, revealed that the quota of subsidized pertalite and diesel fuel oil (BBM) will run out at the end of September or October 2022. Is this a sign that the price of the two types of subsidized fuel oil will increase?

Sri Mulyani explained that the Pertalite quota was allocated at 23 million kilo liters this year, but by the end of July 2022, the volume had been used up to 16.4 million kilo liters.

So that currently only 6.6 million kilo liters are left and can be utilized by the community. The remaining quota is expected to be exhausted by the end of September 2022.

Sri Mulyani, in a meeting with the DPD RI, Thursday (25/8/2022), explained, “If it is followed by mid-even late September, the volume for Pertalite will be exhausted.”

Meanwhile, for the Solar quota, the allocated volume of the quota reaches 15.1 million kilo liters. Until July 2022, the consumption volume has used 9.88 million kilo liters. So currently, the quota is only around 5.22 million kilo liters.

“If we follow this trend, the quota will run out in October (or September)” She said.

Sri Mulyani explained that the government has been working hard through the state budget to contain energy prices, ranging from fuel, 3 kg LPG, to electricity this year through a subsidy and compensation budget of Rp 502.4 trillion. This figure has almost tripled from the previous allocation which only reached Rp 158 trillion.

Sri Mulyani said that when the government requested approval from the Banggar DPR for additional subsidies and compensation of up to Rp 502.4 trillion, the government’s calculation was to use the Indonesian Crude Price (ICP) of US$ 100 per barrel at the rupiah exchange rate of Rp. IDR 14,450/US$.

Amid geopolitical tensions between Russia and Ukraine, the price of crude oil then rose, reaching US$ 105 per barrel and causing the rupiah exchange rate to also depreciate to Rp. 14,750 per US dollar.

As a result, if the volume of consumption of Pertalite and Solar is not controlled during world crude oil prices and the rupiah exchange rate which is still fluctuating, the Rp 502.4 trillion budget will no longer be able to hold back energy prices, especially Pertalite and Solar.

Sri Mulyani said that currently, the retail selling price of Pertalite is Rp 7,650 per liter, whereas, with the ICP exchange rate of US$ 100 per barrel and the exchange rate of Rp 14,450/US$, the economic price of Pertalite should be Rp 14,450 per liter. The difference of around Rp 6,800 per liter was then paid by the government to Pertamina as compensation.

Meanwhile, for Solar, the retail selling price is IDR 5,150 per liter, with an economic price of IDR 13,950 per liter. So there is a difference of around Rp. 8,300 per liter which the government must then guarantee through compensation to the government.

Furthermore, the current retail selling price of 3 kg LPG is Rp 4,250 per kilogram, even though the economic price should be Rp 18,500 per kilogram. So the difference is approximate Rp. 14,000 per kilogram which Pertamina must also pay to the business entity.

“If someone says the subsidy is revoked, we don’t revoke the subsidy, the money has run out of Rp. 502 trillion. Do we want to add it or not? If we add it, where does the budget come from, ask us to borrow?,” said Sri Mulyani.

“The increase (the subsidy) is approximate if the trend is the same as the oil price of US$ 104 to US$ 105 per barrel, with the depreciation of the exchange rate, to Rp. 14,750, the subsidy must be added because the oil is still imported,” said Sri Mulyani again.