Observers Call The Policy On Governance Of Distribution Of LPG 3 Kg Strategic Steps

JAKARTA - The government is considered to have taken appropriate steps regarding the policy of governance of the Liquified Petroleum Gas (LPG) 3 kilograms (kg) subsidy. The policy in question changes the status of retailers to sub bases based on state supervision.

"The government's subsidized LPG distribution arrangement is a strategic step considering the increasing burden of energy subsidies," said Researcher The Reform Initiative (TRI) as well as lecturer at Airlangga University's Faculty of Economics, Unggul Heriqbaldi in Jakarta, Thursday, February 20.

Nevertheless, Unggul warned that price adjustments and improvements to the 3 kg LPG distribution system or melon gas must be carefully designed. According to him, reform efforts in these two areas need careful planning and measurable implementation so that the impact remains under control economically and socially.

"The government must ensure that the adjustment mechanism does not cause turmoil that can exacerbate people's purchasing power. Therefore, this policy delivery process must be carried out in stages, transparently, and with a clear mitigation strategy so that the final goal of improving welfare is truly achieved," he said.

On the other hand, continued Unggul, although subsidies aim to improve people's welfare, their effectiveness in reducing poverty still needs to be investigated further. The reason, said Unggul, is that citing World Bank Estimation Data (2022), every 1 percent of GDP allocated for fuel subsidies is only able to reduce poverty by 1.2 percent.

"This is much lower than direct assistance which can reduce poverty by up to 6.4 percent. Therefore, ensuring target accuracy is the key so that the subsidy budget really has a significant impact on community groups who need it the most," he said.

Previously, Minister of Energy and Mineral Resources Bahlil Lahadalia said the government was drafting regulations so that the status of retailers could be changed to a base so that people could get the appropriate price when buying directly at the base. The policy was then refined again by changing the status of retailers to sub bases.

Bahlil announced that all 3 kg LPG retailers in Indonesia around 375 thousand will be raised to sub base status. This step aims to ensure that the distribution of subsidized LPG is right on target and prices remain affordable.