Fuel price hike plan leads to long queues at gas stations

Ika Krismantari , The Jakarta Post , Jakarta | Mon, 05/12/2008 6:46 AM | Headlines

The government's announcement of impending fuel price increases has led to a spike in fuel consumption marked by long queues at gas stations in many parts of the country, with some areas forced to introduce limits on transactions.

Antara news agency reported long lines of vehicles Sunday at gas stations in Palangkaraya (Central Kalimantan), Jambi, Banjarmasin (South Kalimantan) and across Java, from Purwakarta in West Java and Yogyakarta and Tegal in Central Java, to cities in East Java.

Hanung Budya, the deputy director of marketing at state gas and oil company PT Pertamina, said fuel consumption has increased since the government announced it would raise fuel prices to help cap subsidies amid soaring global crude oil prices.

"The reaction of the people (to planned fuel price increases) has always been the same. They try to buy fuel in large amounts, more than they need," Antara quoted Hanung as saying.

Pertamina spokesman Wisnuntoro predicted that fuel consumption in Java alone had risen by 10 percent since the announcement.

"If it is not dealt with properly, May's consumption will soar," he said.

Pertamina is cooperating with the police to secure fuel distribution in regions, including placing officers at gas stations, to try to prevent hoarding and the illegal sale of fuel to industrial buyers.

Police in several areas, including Jakarta, have arrested several people allegedly involved in hoarding.

With an assumed fuel consumption this year of 35.5 million kiloliters, the state budget allocates Rp 126.8 trillion (US$13.7 billion) for fuel subsidies.

In some areas in West Java, including Purwakarta, a number of gas stations have limited fuel purchases at 20 liters per vehicle.

The Energy and Mineral Resources Ministry said that aside from raising fuel prices, the government will speed up its kerosene conversion program and introduce a Smart Card program aimed at limiting the sale of subsidized fuels to non-qualified parties, to keep the budget in check.

This year, Pertamina targets to help 15 million households move from kerosene to liquefied petroleum gas, or LPG, to reduce the government's subsidy burden.

The Smart Card program is expected to start in September and targets motorists and public transportation.

Meanwhile, commenting on a technical glitch at the Balongan refinery in Indramayu, West Java, which produces LPG, Pertamina said it would not lead to supply disruptions.

Balongan produces 1,300 tons of LPG a day, making it the country's biggest LPG producer. Most of its production goes to Jakarta and West Java.

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