JAKARTA: President Prabowo Subianto has approved a special diesel price of Rp 15,000 (US$0.83) per liter for fishermen operating vessels between 30 and 200 gross tonnes (GT).
The decision, which effectively cuts fuel costs by nearly 30 percent, was announced following a cabinet meeting on Monday.
To make the scheme financially viable, the government has set a domestic reference price for nonsubsidized diesel at Rp 18,600 per liter, based on average production costs.
The resulting price gap of approximately Rp 3,600 per liter will be covered through a subsidy, but not from the state budget. Instead, the funds will be drawn from the Plantation Fund Management Agency (BPDP).
Coordinating Economy Minister Airlangga Hartarto justified the use of BPDP funds by noting the agency’s healthy financial position and the narrowing price differential between crude oil, diesel and biodiesel.
“The BPDP currently has sufficient funds to cover this. The fiscal space exists because oil and biodiesel prices are converging, so this won’t burden the state budget,” he said, as quoted by Bisnis.com.
While small-scale fishermen with vessels under 30 GT already received subsidized B50 biodiesel at Rp 6,800 per liter, their mid-scale counterparts have been left to purchase nonsubsidized fuel, which recently surged to Rp 21,300 per liter.
“We saw that the nonsubsidized price had jumped sharply, and these fishermen desperately needed cost relief. The agreed special price is Rp 15,000 per liter,” Airlangga said, as quoted by Bisnis.com.
Energy and Mineral Resources Minister Bahlil Lahadalia is expected to issue the technical regulations to enact the subsidy.
The government has allocated a distribution quota of 400,000 tonnes of this specially priced fuel for the next six months.
The special pricing policy comes on the heels of Indonesia’s latest biodiesel milestone.
Designed to curb fossil fuel imports, the national biodiesel program has progressively raised the mandatory palm oil-based content in diesel blend from 30 percent to 35 percent, then to 40 percent, and most recently to 50 percent (B50) in July.
While the policy promises to spur domestic demand for crude palm oil (CPO), industry players caution that without significant improvements in plantation yields, maintaining the mandate in the coming years could prove challenging.
Previously, Bahlil floated the government’s plan to impose a ban on diesel imports for private retailers next year, citing a projection of sufficient domestic supply.
The country imported more than 3 million kiloliters (kL) of diesel annually over the past few years, according to the ministry’s Handbook of Energy and Economic Statistics of Indonesia (HEESI) 2024.
Import volumes rebounded sharply to 5.27 million kL in 2022 after declining during the COVID-19 pandemic in 2020 and 2021, it showed.
While imports remained high in 2023 at 5.14 million kL, this was followed by a notable decrease to 4.24 million kL last year, in part because of the national biodiesel program.- Jakarta Post/ANN
