JAKARTA. The price of Premium fuel oil (BBM) next year will be much like the price of Pertamax and other types of non-subsidized fuel: can go up and down every month. That's because the government plans to implement a fuel subsidy with a fixed amount per liter.

Finance Minister Bambang Brodjonegoro said, the government would use a fixed fuel subsidy mechanism from 2015. "Subsidies are no longer at a fixed price, but the value of the subsidy is fixed," he said, last weekend. However, the government has not set the amount of subsidy for each liter of fuel.

With a fixed mechanism, the value of the fuel subsidy that the government must pay will not change, even though crude oil prices up or down. For example, the current economic price premium of Rp 10,000 per liter. With a retail price of Rp 8,500 per liter premium, the government pays a subsidy of Rp 1,500 a liter.

Well, when the economic price premium rose to Rp 11,000 per liter, the government still only bear a subsidy of Rp 1,500 per liter. So automatically, the selling price of the premium will increase to Rp 9,500. Megawati government has implemented a system that is almost similar. At that time, the government set the price of subsidized fuel by 50% of the market price. Thus, gasoline and diesel prices can go up or down every month.

Regardless any subsidy scheme applied, subsidized fuel prices should be cheaper next year. That's because the price of crude oil WTI fell to US $ 57.13 per barrel in trading on Friday (19/12). That figure is down from this year's highest price: US $ 101.18 per barrel.

With oil prices at around US $ 50 per US dollar and the exchange rate of Rp 11,900 per US dollar by 2015 budget assumptions, KONTAN calculations shows, premium economic price before taxes only $ 4402.52 per liter.

According to Juda Agung, Executive Director of the Department of Monetary Economics of Bank Indonesia (BI), the fixed fuel subsidy scheme is better for the government. If this policy began in January 2015, the deflation can occur in the months of February and so on. With notes, oil prices continued to fall in January. "The decline in oil prices is an opportunity for us to immediately implement a fixed subsidy," said Judah.

Juniman, Chief Economist BII, said, the fixed fuel subsidy will benefit the government. The government could save up to hundreds of trillions budget.

Editor: Amal Ihsan