Fiscal Policy Agency - Ministry of Finance Energy Subsidy Policy and Fossil Fuel Reform Koh Samui, 18 March 2013 1
Fuel subsidy in Government Budget Trilliun Rp 600,0 27,9 BBM Fuel Listrik Electricity Non Non energi Energy % subsidy Subsidi thd to Belanja Govt Exp Negara 30,0 500,0 22,8 23,4 25,0 400,0 300,0 200,0 100,0 0,0 19,8 18,5 346,4 18,8 317,2 16,1 295,4 275,3 14,7 192,7 211,9 139,1 165,2 193,8 150,2 138,1 107,4 82,4 83,8 45,0 83,9 64,2 49,5 57,6 90,4 94,6 80,9 33,1 30,4 12,8 33,3 52,3 43,5 52,8 39,8 39,9 42,5 2006 2007 2008 2009 2010 2011 2012 2013 Realization Budget APBN 20,0 15,0 10,0 5,0 0,0 6.9-33.4 9.4 15.0 8.1 2005 18.1 9.1 Belpeg Personal Exp Bel Goods Exp barang Bel Capital Modal Exp Bunga Debt Interest Utang Subsidi Subsidy Exp 27.5 0.35.5 2.8 9.8 2013 18.7 20.9 14.5 Subsidy portion is still dominant reducing Govt discretion to expand the support for insfrastructure and other strategic programs. 2
Fuel Prices Impact on Subsidies Rp Trillion Fuel Subsidy Electricity Subsidy Oil Price (ICP) USD/barel 400 300 90.0 105.0 112.7 100.0 120 90 200 100 123.6 137.4 211.9 193.8 60 30 0 45.0 65.0 94.6 80.9 Budget Revised Budget Realization Budget 2012 2013 0 Oil price has a strong effect on fuel subsidy. Fuel subsidy in 2013 is expected to be around Rp193.8 trillion. However, taking into account the current development of the ICP, fuel subsidy in 2013 will be higher than initially expected. 3
Fuel Subsidy, 2012-2013 2012 2013 Budget Budget Revised Budget Fuel Subsidy total (billion Rp) 123.599,7 137.379,8 193.805,2 1. Fuel subsidy 89.441,7 91.891,0 146.461,8 a. Gasoline 51.145,8 51.698,3 87.195,1 b. Kerosene 6.184,9 7.882,5 8.035,1 c. Diesel 32.111,0 32.310,3 51.231,7 2. gas 22.921,6 29.126,2 26.452,0 3. LGV - 54,0 100,0 4. VAT 11.236,3 12.101,7 17.291,4 Assumption 1. ICP (US$/barel) 90 105 100 2. Exchange Rate (Rp./US$.1) 8.800 9.000 9.300 3. Parameter Alpha (Rp/liter) 613,9 641,9 642,6 4. Fuel consumtion (Ribu kl) 40.000 40.000 46.010 a. Gasoline 24.411 24.411 29.200 b. Kerosene 1.700 1.700 1.700 c. Diesel 13.889 13.889 15.110 5. gas consumption (million kg) 3.606 3.606 3.859 6. Additional Biofuels subsidy (Rp/liter) - Bioethanol 3.500 3.500 3.500 - Biodiesel 3.000 3.000 3.000 7. Retail Price (Rp/Liter) Assumption per April a. Gasoline 4.500 6.000 4.500 b. Kerosene 2.500 2.500 2.500 c. Diesel 4.500 6.000 4.500
Fuel and BioFuels Benchmark Price ICP (US$/barel) IDR (Rp/US$) Benchamark Prices (Rp/ltr) Benchamark Prices (Rp/ltr) Gasoline Diesel Bioethanol Biodiesel Jan 12 115,9 9.064 6.917 7.686 6.877 8.672 Feb 122,2 8.981 7.386 7.898 6.968 8.782 Mar 128,1 9.119 7.956 8.284 7.378 8.973 Apr 124,6 9.130 8.306 8.479 7.157 9.249 Mei 113,8 9.244 8.220 8.385 7.163 9.188 Jun 99,1 9.404 7.562 7.902 7.013 9.111 Jul 102,9 9.410 6.542 7.123 7.054 8.557 Agust 111,7 9.453 7.116 7.595 7.182 8.550 Sep 111,0 9.518 7.989 8.399 6.598 8.489 Okt 109,9 9.549 7.920 8.500 5.894 8.867 Nop 106,7 9.580 7.832 8.348 5.783 8.066 Des 106,9 9.598 7.603 8.133 7.348
Conversion Program : Fuel into Gas Expected Savings of Conversion: Taxi/Public Transportation Motorbike BBG BBG Gasoline ViGas Gasoline ViGas Local Gas LNG Locas gas LNG 1. Subsidi, billion Rp/year (1.713) (1.260) 168 (762) (7.708) (7.401) (1.891) (6.075) 2. Saving of conversion, billion Rp/year - 453 1.881 951-307 5.817 1.633 Assumption : taxi 27 ribu unit, Public transportation 22 ribu unit, and motorbike 9 million unit. Coversion Cost Borne by Government Taxi/Public Transportation Motorbike Gasoline ViGas BBG BBG Gasoline ViGas Local Gas LNG Locas gas LNG 1. Convertor, billion Rp. - 735 588 588-9.000 13.500 13.500 2. Dispenser, M Rp - - - - - - - - 3. Gas Station, biilion Rp - 540 540 540-540 540 540 4. Gas Piping, billion Rp - - 130 130 - - 130 130 Total, billion Rp - 1.275 1.258 1.258-9.540 14.170 14.170
Widen Price Disparity (Economic vs Subsidized price) 12,000 IDR/Ltr 11,000 10,000 Premium Economic Keekonomian Price (Gasoline) Solar Economic Keekonomian Price (Diesel) Premium Subsidized dan price Solar (Gasoline Bersubsidi & Diesel) Pertamax price 9,000 8,000 7,000 6,000 5,000 4,500 4,000 3,000 2,000 Jan'11 Mar Mei Juli Sept Nov Jan'12 Mar Mei Jul Sep Nop Jan'13 Wider price gap (economic vs subsidized price) lead to increase fuel consumption. 7
Fuel Consumption 50,0 40,0 Juta KL Million KL Solar Diesel Minyak Kerosene Tanah Premium Gasoline 37,4 38,6 39,2 37,9 38,2 41,8 40,0 45,0 46,0 30,0 16,8 17,9 19,5 21,2 22,9 25,5 24,4 28,2 29,2 20,0 10,0 0,0 10,0 9,9 7,9 4,7 2,3 1,7 1,7 1,2 1,7 10,7 10,9 11,8 12,0 13,0 14,5 13,9 15,6 15,1 2006 2007 2008 2009 2010 2011 2012 APBN-P Budget Revised Realisasi 2013 APBN Realization Budget Fuel consumption : gasoline for 3 years on average increased by 10% and diesel by 9%. 8
Fuel Price in Selected Country Rp/ Liter 21.000 18.000 15.000 12.000 9.000 6.000 3.000 Gasoline PREMIUM Sep-12 Nop-12 Jan-13 - Singapura Philipina Thailand China Jepang India Korea Australia Malaysia Vietnam Pakistan Indonesia Rp/ Liter 21.000 18.000 15.000 12.000 9.000 6.000 3.000 SOLAR Diesel Sep-12 Nop-12 Jan-13 - Singapura Philipina Thailand China Jepang India Korea Australia Malaysia Vietnam Pakistan Indonesia Source : Bloomberg
Energy Subsidy Policies 2013 Fuel Subsidy : Controlling subsidised fuel consumption by controlling, supervising, and managing its distribution Increasing BBM to BBG conversion, particularly for transportation in big cities; Continuing kerosene to LPG (3kg) conversion program, especially in East Part of Indonesia; Continuing development program of gas for urban households; Expanding the uses of biodiesel to 10 persen. Tax incentives for low cost green car Electricity Subsidy: Electricity tariff adjusment by 15% on average, except customer category of 450 VA and 900 VA Implementing the efficiency of source of energy PT. PLN, follows: 1. Reducing the use of oil in generating the electricity by optimizing the use of gas, coal, geothermal, and other non-oil energy; 2. Reducing the electricity losses; Increasing the electrification ratio. Including the use of solar cell for small islands
Strategies for the Efficiency of Subsidized Fuel 1. Adjusting Tariff 4. Non-oil energy alternatives 2. Consumption s restriction 16 5. Environmenally Friendly Vehicles 3. Conversion program of fuel to gas Reallocation for more productive programs The percentage of Priority Exp to GDP
The Gov t of Indonesia has implemented the consumption s restriction of fuel subsidized.. Consumption s restriction Presidential Act No 15/2012 The change of the criteria of subsidized fuel consumer. Permen 01/2013 Gradually limit the use of fuel by government institution (central and local government and state owned enterprise), mining sector, plantation, foresty, non-pioneer cargo shipping S T E P S Diversification of BBM to BBG Presidential Act No 64/2012 a. CNG for public transportation *) b. Implementing the program gradually DEMAND SIDE MANAGEMENT Other institutional supports a. Accelerating the mass transportation development b. Developing the non-oil vehicles (e.g. hybrid and electricity vehicles) *) free converter kit for public transportation
Subsidized Fuel Consumption Control Strategies In 2012 : Gradually limit the use of premium by government institution (central and local government and state owned enterprise) in Jabodetabek (Jakarta and suroundings) since 1 June 2012, and from 1 August 2012 for the rest of Java and Bali, The government also ban the use of subsidized autodiesel for vehicles for plantation and mining activities since 1 September 2012, The government also continue to carry out the conversion program from kerosene to LPG In 2013 (MEMR Degree No. 1/2013): a. Extending to limit the use of premium to other region gradully starting in Kalimantan and Sumatera from 1 February 2013 and Sulawesi from 1 July 2013; b. Gradually limit the use of autodiesel by government institution (central and local government) in Jabodetabek (Jakarta and suroundings) since 1 February 2013, and from 1 March 2013 for the rest of Java and Bali; c. Ban the use of subsidized autodiesel for vehicles for plantation and mining activities since 1 September 2012; d. Ban the use of subsidized autodiesel for vehicles for forestry activities since 1 March 2013; e. Exceptions for (c) and (d) are given to as following: (a) plantation <25 ha, (b) small scale mining, and (c) small scale forestry; and f. Ban the use of non-pioneer shipping in using subsidized autodiesel since 1 February 2013.
Electricity Subsidy 14
Electricity Subsidy Policies Targetted Subsidy, Consumer of S-1, S-2, R-1, I-1 and B-1, with capacity <450 VA and used <60 kwh s.d 2001 Cash flow subsidy 2002 s.d 2004 2005 s.d sekarang 2005 Extended consumer subsidy Rp Triliun 100.0 80.0 83.9 90.4 80.9 60.0 40.0 20.0-3.9 4.6 4.1 65.0 57.6 30.4 49.5 8.9 33.1 3.8 2.3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Budget Revised APBN-P 2013 Budget APBN 15
Supply Cost Higher than Regulated Tariff 1,400 1,271 1,351 1,245 1,200 1,059 1,089 1,091 1,000 925 934 839 800 600 686 592 623 624 654 662 693 738 730 400 200-2005 2006 2007 2008 2009 2010 2011 APBN-P 2013 2012 BPP (Rp/kWh) 686 925 934 1,271 1,059 1,089 1,351 1,091 1,245 HJTL (Rp/kWh) 592 623 624 654 662 693 738 730 839 Tahun 2005 2006 2007 2008 2009 2010 2011 APBNP-2012 2013 Subsidi Listrik (Rp/kWh) Electricity Subsidy 94 303 310 617 397 396 613 361 406 16
Electricity, 2013 JENIS SUBSIDI 2013 No Tariff Increase Budget Assumption: - ICP (US$/barel) 100 100 - Exchange Rate (Rp/US$) 9.300 9.300 - Growth Sales (%) 9,00 9,00 - Energy sales (TWh) 182,28 182,28 - Looses (%) 8,50 8,50 - Electricity tariff(%) 15 15 - Fuel Mix - HSD (juta KL) 4,3 4,3 - MFO (juta KL) 1,4 1,4 - Batu Bara (juta ton) 48,8 48,8 - Gas (MBBTU) 0,4 0,4 - Panas Bumi (TWh) 4,2 4,2 - Bio Diesel (juta KL) 0,0 0,0 - Margin (%) 7 7 Eelectricity Subsidy (billion Rp) 95,83 80,94
Fuel Mix PT PLN 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 2010 2011 2012 2013 BBM Fuel 36% 25% 22% 22,95% 13,83% 9,70% Bio Diesel & EBT Geothermal Lainnya 0% 0% 0% 0,07% 0,52% 0,52% Hydro 9% 8% 12% 6,80% 6,29% 6,19% Panas Geothermal Bumi 3% 3% 3% 5,13% 4,79% 4,80% Gas 17% 25% 25% 21,00% 23,18% 22,12% Coal Batubara 35% 39% 38% 44,06% 51,40% 56,66%
Feed in Tariff Geothermal (MEMR Decree No. 22 /2012) Region Purchased Price Geothermal (cent US$/kwh High Voltages Low Voltages 1 Sumatera 10,0 11,5 2 Jawa, Bali dan madura 11,0 12,5 3 Sulsel, Sulbar, Sultenggara 12,0 13,5 4 Sulut, Sulteng, dan Gorontalo 13,0 14,5 5 NTB dan NTT 15,0 16,5 6 Maluku and Papua 17,0 18,5
Feed in Tariff Renewable Energy (MEMR Decree No. 4 /2012) Purchased price of electricity as in Article 1, if it s from biomass and biogas : Rp975/Kwh x F, if connected to middle voltage; Rp1.325/Kwh x F, if connected to lower voltage. F is an insentive factor following regional base: Java, Madura, Bali, dan Sumatera, F = 1; Sulawesi, Kalimantan, Nusa Tenggara Timur, and Nusa Tenggara Barat, F = 1,2; Maluku dan Papua, F = 1,3. Purchased price of electricity as in Article 1, if it s urbane waste: Rp1.050/Kwh, if connected to middle voltage; Rp1.398/Kwh, if connected to lower voltage. Purchased price of electricity as in Article 1, if it s urbane waste with sanitary landfill : Rp850/Kwh, if connected to middle voltage; Rp1.198/Kwh, if connected to middle voltage;
Thank you 21