House Criticizes Subsidized Fuel Price Increase

 
Robert Sidauruk, Rofiq Hidayat, Kartini L Makmur
 
The upstream and downstream oil sectors are now the center of government and public attention, following the hike in the subsidized fuel prize last week. On one hand, the new price of subsidized fuel set by the government is considered inappropriate given current domestic and global circumstances. Meanwhile, on the other hand, the public has lost trust in the Special Works Unit for Upstream Oil and Gas Activities (SKK Migas) as the key authority that regulates the upstream oil sector.
 
Azam Natawijaya, Deputy Chairperson of Commission VI at the House of Representatives (House) argues that the President has violated Article 14 (3) of Law No. 12 of 2014 on 2014 on the State Budget Plan (2014 APBN Law). This article mandates government to consider global oil prices when considering an increase to subsidized fuel prices, which are currently in a downward trend.
 
“The current world’s oil price is USD 74.05 per barrel, which is below the predicted price set under the 2014 APBN Law at USD 105 per barrel. Hence the policy to increase the subsidized fuel price by the government is not in accordance with 2014 APBN Law,” said Mr. Natawijaya at the DPR’s office in Jakarta last Friday.
 
Likewise, Achmad Hafidz, Chairperson of Commission VI at the House, contends that the inappropriate increase of subsidized fuel prices will result in significant negative impacts on industry and small-medium enterprises. Mr. Hafidz said that the increase in the subsidized fuel price is not being supported by an improvement in the purchasing power of the general public.
 
To deal with this issue, Mr. Hafidz indicated that the DPR will invite the government to discuss the grounds of the government to increase the subsidized price and steps that needs to be taken to address the consequences of the policy.
 
Improvement to Performance of SKK Migas
In an effort to strengthen the national oil sector, the newly-appointed Head of SKK Migas, Amien Sunaryadi promised that his institution will accelerate its decision-making processes and ensure legal certainty for oil businesses in Indonesia. However, to effectively achieve these objectives, Mr. Sunaryadi is urging all stakeholders, including the House and Minister of Finance to work together to improve the oil business sector.
 
“We hope all the stakeholders can working together so that national oil production can reach its optimum level,” said Mr. Sunaryadi at SKK Migas’s office in Jakarta last Friday.
 
On the same occasion, Sudirman Said, Minister of Energy and Mineral Resources said that he will initially press for the realization of the promises made by Mr. Sunaryadi to realize legal certainty and efficient administrative processes at SKK Migas. Similar to Mr. Sunaryadi, the Minister emphasized that the objectives will not be achieved if they are not supported by all stakeholders in the oil downstream sector, including oil businesses.
 
“Mr. Sunaryadi plans for SKK Migas to perform its functions in a timely and effective manner. We will keep monitoring the realization of this plan,” concluded Mr. Sunaryadi.
 
(hot/kc)