Jakarta. An analyst recently warned that the new 3-kilogram cooking gas policy could even cause the state spending allocated for energy subsidy to soar even more without stricter regulations on the eligible beneficiaries.

Every year, the government allocates a sizable amount of state money to subsidize affordable cooking gas for low-income families and micro-scale businesses.

Last year, the state spending for the 3-kg cooking gas program subsidies reached Rp 80.2 trillion (nearly $4.9 billion). The program, however, has seen cases of affordable gas going to wealthy families and larger enterprises instead. And so starting this month, the government has decided to only allow registered distributors to sell the 3-kg liquefied petroleum gas (LPG) that is synonymous with its lime green-colored canister.  etailers can sign up as an official distributor to the state-owned oil and gas company Pertamina. 

Sofyano Zakaria, a director at the think-tank Center for Public Policy Study (Puskepi),  said that the restrictions do not automatically translate into less government spending for the subsidy. According to the analyst, the actual problem lies in the subsidy benefitting people who aren't intended to receive the support.

"If the restriction is meant to make sure that the subsidized LPG are on target, the government should have come up with stricter regulations on who is eligible for the subsidies instead of just mandating retailers to become authorized distributors,” Sofyano said in Jakarta, as reported by the state news agency Antara.

According to Sofyano, the 2007 presidential regulation, which regulates the 3-kg LPG distribution, is often subject to misinterpretation. There is a gray area in regard to who deserves the subsidies that the government needs to clarify. On the ground, households regardless of their income can still purchase subsidized LPG. Medium-sized enterprises can also still access the cheaper cooking gas despite it being meant for their micro counterparts.

“Turning retailers into official distributors does not guarantee that the government can save money on the spending allocated for 3-kg LPG,” Sofyano said.

Retailers might be hesitant to become official distributors as they assume they could earn more money by not registering with Pertamina. People might also prefer to buy directly from retailers despite the slightly higher cost because it is closer to their homes or shops, Sofyano warned. Even so, he said that he still hoped this strategy could lead to a more controlled distribution of the affordable cooking gas.

Energy Minister Bahlil Lahadalia not long ago said that the new policy on the authorized distributors was necessary to make sure that the government-subsidized gas would go to the well-deserving people. He also denied that there was scarcity in affordable cooking gas.

“Distribution is going just like normal. It is just that we are imposing some restrictions to make sure that it is really the people who deserve them that are benefitting from the program. …  It is subsidized by the government, so it must be used by the people who need it,” Bahlil said not long ago.

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