Auto Industry Attacks Ban on Cheap Fuel for Luxury Cars

By webadmin on 10:22 am Sep 12, 2012
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Ivan Dasa Saputra

Plans by downstream oil and gas regulator BPH Migas to ban luxury cars in Jakarta from consuming subsidized fuel has been met with confusion in the nation’s automotive sector.

Jongkie Sugiarto, a deputy at the Association of Indonesian Automotive Manufacturers (Gaikindo), questioned whether the government would define luxury cars based on brands or price, or alternatively refer to engine capacity.

“What cars would fall into the luxury category? Is a car with Rp 100 million [$10,400] a luxury one? Or ones with the price above Rp 1 billion? Or does it have to be a specific brand?” He asked rhetorically on Tuesday.

Djoko Iswanto, the BPH Migas director responsible for oil fuel, said on Sunday that the agency plans to ban luxury cars in Jakarta from using subsidized fuel as part of government efforts to curb the capital’s use of subsidized fuels.

He said the regulator planned to release a regulation on the matter this month.

Djoko announced the plan after state-owned energy company Pertamina revealed data showing that as of Aug. 30, Jakartans had used 1.41-million kiloliters of subsidized fuel this year, exceeding its eight-month quota.

Jongkie, who is president director of Hyundai Indonesia, said Gaikindo already required its members, which include local-assemblers and importers of cars, to comply with Industry Ministry regulation, requiring all cars produced later than 2006 to comply with Euro 2 emission standards.

The standard recommends oil fuel octane levels above 91, requirements only non-subsidized Pertamax and Pertamax Plus meet. Subsidized fuel Premium has an 88 octane rating.

The use of gasoline with low octane in new cars may lead to engine problems. However, car owners can have their post-2006 cars modified to accommodate low-octane fuels.

Jongkie questioned whether owners of luxury cars will find it difficult to fill their tanks, because gas stations that currently sell non-subsidized fuels are limited.

Djoko said on Tuesday that BPH Migas may use brands to define luxury cars because workers at fuel stations may find it difficult to identify engine capacity.

The plan is the latest effort to limit the range of vehicles using subsidized fuel.