Gov’t Urges Subsidized 3-kg LPG Consumers to Sign Up for Well-targeted Distribution

Source: PR of Ministry of Energy and Mineral Resources (ESDM)

The Government has renewed its commitment to transform the subsidy policy for 3-kilogram liquefied petroleum gas (LPG) cylinders that started with a meticulous data collection and consumer matching process for more precise targeting.

According to Director General of Oil and Gas for Ministry of Energy and Mineral Resources (ESDM) Tutuka Ariadji, only registered consumers could purchase 3-kilogram LPG cylinders starting January 1, 2024.

“The data collection is a follow-up to the financial notes for the 2023 fiscal year which points out the Government’s commitment to gradually transform the 3-kg cylinder LPG subsidy for targeted recipients aligned with social protection program in stages taking into account economic recovery and people’s purchasing power,” Tutuka said as quoted from the Ministry’s official website, Friday (08/25).

He went on to say that the policy is expected to be well-targeted and provide optimal benefits for subsidy recipients.

As of March 1, 2023, the Government through state energy company Pertamina has collected data on 3-kilogram LPG users at sub-distributors into a website-based system as the initial stage of the Targeted 3-kg LPG Distribution Program.

The Ministry’s Director General of Oil and Gas conveyed that there is no restriction on the purchase of the 3-kg LPG. However, once consumers’ data has been recorded within the system, they will be required to present their identity cards during the purchase, while micro-business consumers are required to attach an additional picture of themselves at their business location.

The Government has carried out dissemination of the 3-kg LPG distribution transformation program to the distributors several times from March 6 to July 3, 2023 in 411 regencies/cities across the islands of Sumatra, Java, Bali, Nusa Tenggara, Kalimantan, and Sulawesi.

In 2022, Pertamina also carried out system trials in five subdistricts, including Cipondoh in Tangerang city, Ciputat in South Tangerang city, Ngalian in Semarang city, Batu Ampar in Batam city, and Mataram in Mataram city.

According to Presidential Regulation Number 104 of 2007 and Presidential Decree Number 38 of 2019, 3-kg LPG is only intended for households and micro businesses that use 3-kg LPG cylinders for cooking, targeted fishermen, and targeted farmers.

As a follow-up, the Government has issued Minister of Energy and Mineral Resources Decree Number 37.K/MG.01/MEM.M/2023 on Technical Instructions for Distribution of Certain Refills for Liquefied Petroleum Gas and Decree of Director General of Oil and Gas Number 99.K/MG.05/DJM/ 2023 on Well-Targeted Distribution of Specific LPG Refills in Designated Areas and Timelines.

As part of efforts to realize the Well-Targeted 3-kg LPG subsidy, the Government together with the Indonesian National Police and Pertamina continue to increase supervision and provide sanctions against agents, bases, or individuals who commit violations such as mixing 3-kg LPG into non-subsidized LPG.

For the record, the annual volume of 3-kg LPG has consistently grown by an average of 4.5% each year. On the other hand, the average volume of non-subsidized LPG decreased by 10.9 percent.

The actual volume of 3-kg LPG experienced a steady rise over the years: from 6.84 million metric tons in 2019 to 7.14 million metric tons in 2020, with increments of 7.46 million metric tons in 2021 and 7.80 million metric tons in 2022.

Other forms of violation related to 3-kg LPG include hoarding LPGs, sales exceeding the highest retail price (HET), selling/transporting LPG to non-distribution areas (across regencies/cities or areas where kerosene has not been converted yet to 3-kg LPG cylinder), as well as transporting 3-kg LPG cylinders using non-registered vehicles.

Furthermore, Tutuka stated that it was necessary to improve the distribution mechanism for the 3-kg cylinder LPG currently in effect. Manual recording of transactions within the base logbook is considered prone to data manipulation since it is unable to show the real 3 kg cylinder LPG user profile.

The ongoing process of data collection and user-matching data is expected to answer these challenges. In addition, a mapping of the location and number of sub-distributors will be carried out as well as the presence of 3 kg cylinder LPG retailers.

The Government will also conduct a direct survey to ensure that people at the grassroots level can buy 3 kg LPG cylinders. Local governments are also expected to participate in controlling the availability of 3 kg LPG cylinders in sufficient quantity, good quality, and affordable prices, as mandated by Article 3 paragraph (1) of Presidential Decree Number 71 of 2015 on Stipulation and Storage of Basic Necessities and Important Goods.

On that occasion, Tutuka also sought support from all relevant stakeholders in carrying out the transformation of well-targeted distribution of 3 kg LPG.

“This transformation process is indeed not easy because there are certainly many obstacles and challenges on the ground. However, it is something possible to do through our commitment together. To that end, support from all agents and distributors, as well as the public is a key factor in the success of this data collection,” he remarked. (PR of Ministry of ESDM/UN) (RIF/LW)