2013 Mar 07

Indonesian Cargo Ships to Only Use Non-Subsidized Fuels

The Indonesian National Shipowners Association (INSA) has issued an order prohibiting all cargo ships from using subsidized fuels, one of its executives, Jojok Moedjijo, said on Wednesday.

Jojok, who also headed the Association of Fuel Suppliers of Indonesia (APBBMI) until last year, said that the instruction was in support of the government’s efforts to curb consumption of subsidized fuels.

He said that the decision was reached during a recent working meeting of the association and added that it also abides by the regulation set by the Energy and Mineral Resources Ministry earlier this year on the restriction of fuel consumption.

“The Energy and Mineral Resources Ministry’s regulation actually has something to do with us, because it was us who proposed it,” Jojok said on the sidelines of an APBBMI meeting in Jakarta.

He said that the official prohibition will prevent unwarranted price competition between cargo shippers.

“We will educate the public about this ministerial regulation ... in the near future,” Jojok said.

Meanwhile, Suhartoko, who is state oil and gas company Pertamina’s senior vice president for fuel marketing and distribution, said that the regulation only cites passenger ships, ferries using underserved routes and popular shippers as those who are still allowed to use subsidized fuels.

But he said that so far there has been no data available on how much subsidized fuel has been saved so far.

“We have not yet monitored the savings, but if the fuel restriction is not started, the burden of the state will get even heavier,” he said.

Suhartoko admitted that there were difficulties in enforcing the fuel restriction. Even though the transportation arm of the mining, plantation and forestry sectors were all prohibited from using subsidized fuel, for example, enforcement was still weak.

There has also been difficulties because the regulation excuses small scale mining, stone quarries and plantations covering less than 25 hectares.

“They would all say that they are transporting products of small scale plantations [or make other justifications]. If the implementation of the ban is ineffective, it will certainly be Pertamina that will be blamed,” Suhartoko said.

The Energy and Mineral Resources Ministry is targeting a savings of 1.3 million kiloliter of subsidized fuel this year. In 2012, it only managed to save some 350,000 kiloliters, far below the targeted 1.5 million kiloliters.


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