Alleged Oil And Gas Mafia Is Behind The Non-Declining Fuel Prices

Pertamina gas station. (Angga Nugraha / VOI)

JAKARTA - The world oil price has dropped due to the trade war between Russia and the United States. The situation was exacerbated by the outbreak of the corona virus or COVID-19 which had attacked the world.

The impact has been weakening demand since early February. As a result, the price of fuel oil (BBM) also fell. However, in Indonesia this does not happen.

As of Thursday, April 23, Brent crude oil futures for June delivery increased US $ 1.04 or 5.38 percent to US $ 20.37 per barrel. Meanwhile, West Texas Intermediate (WTI) crude oil futures for June delivery rose 2.21 dollars or 19.1 percent to 13.78 dollars per barrel. Despite the increase, the price is still far from the normal price of US $ 60 per barrel.

The downward trend in world oil prices has prompted several countries to reduce the selling price of fuel in their respective countries. One of them is Malaysia, which has lowered fuel prices six times in the last three months. The price of Pertamax Plus (RON 95) class fuel in Malaysia is currently set at only IDR 4,420 per liter, much cheaper than the premium price (RON 88) in Indonesia which is still IDR 6,450 per liter.

In contrast to Malaysia, the price of fuel in Indonesia has not decreased at all. The current price still refers to the price set in early February. One of the reasons for the reluctance of lowering fuel prices was the change to the Minister of Energy and Mineral Resources (ESDM) 187K / 10 / MEM / 2019 regarding the Fuel Price Formula, which was signed on October 7, 2019 by the then Minister of Energy and Mineral Resources, Ignasius Jonan. The new ESDM Minister Arifin Tasrif has changed it to the Minister of Energy and Mineral Resources Decree No. 62K / MEM / 2020 which was signed February 28, 2020.

Gadjah Mada University Energy Economy Observer Fahmy Radhi said the changes to the new Ministerial Decree were related to a constant increase in the formula for setting fuel prices.

For information, in setting the price for RON 92 it is calculated from the Mean Of Plats Singapore (MOPS) price plus Rp1,800. This means that there will be an increase from the previous Rp1,000 plus a 10 percent margin.

Meanwhile, the price above RON 92 is the MOPS price plus IDR 2,000. That is, an increase from the previous IDR 1,000 and IDR 1,200 plus a 10 percent margin. MOPS is the average price of oil in Singapore in the last two months.

Fahmy said, with the Ministerial Decree left behind by Jonan, namely Kepemen 187K / 10 / MEM / 2019, the price of fuel in Indonesia could be reduced by up to two times. In January, the world oil price at that time was still above US $ 60 per barrel.

"Now the oil price tends to drop drastically to an average of below US $ 20 per barrel, why doesn't the fuel price not go down? Based on the formula of the Ministry of Agriculture No. 62K / MEM / 2020, there are at least two possible causes, namely a constant increase and the setting of the MOPS price. which does not match the world oil price, "Fahmy wrote in a written statement received by VOI, Friday, April 24.

Based on the results of the study by the anti-mafia team, Fahmy said, there are indications that the oil and gas mafia in addition to playing in increasing the volume of fuel imports, also plays a role in determining MOPS.

"It is not even possible to play a role in the decision to raise the constant in the formula for setting fuel prices. Although Petral, which has been known as the headquarters of the oil and gas mafia, has been disbanded. (However) the oil and gas mafia is still hanging around," he explained.

This former member of the anti-oil and gas mafia admitted that the oil and gas mafia has become an inherent system capable of influencing government policies. "If the indication of the involvement of the oil and gas mafia is true, it is no exaggeration to say that the oil and gas mafia was behind the decision not to reduce fuel prices amid the drop in world oil prices," he said.

Fahmy said, ESDM Minister Arifin Trasrif must immediately take constructive steps to reduce fuel prices in the near future. One of them is to restore the constant amount in the determination of the fuel price formula, by setting the constant magnitude as stipulated by the previous Minister of Energy and Mineral Resources Ignasius Jonan.

In addition, he said, the Minister of Energy and Mineral Resources must evaluate the amount of MOPS that is adjusted to the prevailing world oil price. This is because the reduction in fuel prices will actually increase people's purchasing power, which is worsening due to COVID-19. The increase in purchasing power will increase consumption and will contribute to economic growth.

In addition, Fahmy said, the decision not to lower the fuel price actually shows injustice to consumers. When the world oil price rose, Pertamina swiftly raised the fuel price. However, when the world oil price dropped drastically, Pertamina did not reduce the fuel price.

"This is the most appropriate moment to simultaneously reduce the price of non-subsidized and subsidized fuel. In addition to increasing purchasing power, it is also to ease the burden on the people who are suffering from the COVID-19 attack," he said.

Moreover, he said, PLN alone had made it free and cut electricity rates to ease the burden on the people. Pertamina should have also followed PLN's steps.

The Impact of Lower Oil Prices on the State Budget

Head of the Information and Public Communication Section of the Fiscal Policy Agency (BKF) Ministry of Finance, Endang Larasati, said producers must immediately hand over stocks to consumers due to limited storage factors. However, this is expected to have an impact in the short term, given that the WTI contract selling price in June was still around US $ 20 per barrel.

"The price of Indonesian crude oil (Indonesian Crude Price or ICP) is currently slightly above the price of Brent oil. Changes in the ICP will have an impact on the state budget, given the ICP price assumption baseline in Perpres 54/2020 is 38 US dollars per barrel for the average price throughout the year 2020, "he said, Tuesday, April 21.

Endang said, if the price continues to decline so that the ICP becomes 30.9 US dollars per barrel in an average year, the deficit is estimated to increase by Rp12.2 trillion.

"The government continues to monitor to carry out anticipatory policies. Including deficit control, one of which is by evaluating non-productive spending, and taking mitigation steps to maintain fiscal sustainability and economic growth," he said.