Economist: Increase In Non-Subsidized LPG Increases The Community's Burden

JAKARTA - Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira assesses that the increase in non-subsidized LPG gas prices will increase the burden on the community. Considering that people's incomes in general have not recovered as before the COVID-19 pandemic.

"What is certain is that the increase in LPG prices will add to the burden on society, especially the middle class. Of course it will result in much higher inflation," he said when contacted by VOI, Monday, February 28.

Not only that, Bhima also believes there will be a migration of middle class people who previously used non-subsidized LPG to switch to 3 kilograms (Kg) LPG gas or melon gas. Therefore, the government must anticipate this.

"What needs to be anticipated is that the middle class, who usually enjoys non-subsidized LPG, may switch to 3 kg LPG or subsidized LPG because the price gap or the difference is getting bigger," he said when contacted by VOI, Monday, February 28.

According to Bhima, if the number of users of subsidized LPG increases, the subsidy spending will also increase. Therefore, Bhima emphasized that the control over its distribution must be tightened.

"This must be monitored by supervision in the regions, yes. So this migration will definitely happen because the difference is getting farther," he said.

In addition, Bhima also admitted that he was worried that the poor and MSME actors who really needed it would find it difficult to get 3 kg LPG gas.

"And this will actually make it difficult for MSME business actors or the poor who are truly entitled to the 3 kg LPG," he said. As is known, PT Pertamina Patra Niaga officially raised the price of non-subsidized LPG to Rp 15,500 per kg. The increase is a gradual increase that has been carried out by Pertamina since the end of December 2021.

Acting PT Pertamina Patra Niaga's Corporate Secretary, SH C&T PT Pertamina (Persero) Irto Ginting explained that the new prices for all non-subsidized LPG products were effective from 27 February 2022.

Furthermore, Irto said that this adjustment was made following the latest developments in the oil and gas industry.

"It is noted that the price of Aramco's Contract Price (CPA) reached 775 US dollars per metric ton, an increase of about 21 percent from the average CPA price throughout 2021," he said in an official statement, quoted Monday, February 28.