Fuel Politics & Business | Analysis by Yosefardi

At 01.00 AM Saturday, finance minister Agus Martowardojo, on behalf of president SBY, approved the amendment of 2012 State Budget. The House of Representatives (DPR) gives government discretion to adjust fuel price in the coming months, but political showdowns would likely heating up. What price SBY pay to get the crucial Golkar Party support?

SBY might have paid substantial price to save his legitimacy to govern. Golkar Party’s support prevented SBY from a humiliating defeat in the voting as Prosperous Justice Party (PKS) sided with opposition parties in rejecting an automatic fuel price adjustment.

SBY-Boediono administration won’t be able to raise fuel price as planned (33% by April 1st), because the amended State Budget only allows government to adjust fuel price if the average Indonesian Crude Price (ICP) is 15% above or below the benchmark ICP price for 2012 Budget.

Implementation of the amended Budget might not be smooth, because opposition parties plan to take the issue to the Constitutional Court. They believe the add-on of Article 7 paragraph 6a (gives discretion to government in adjusting fuel price) is in conflict with Article 7 Paragraph 6 itself, which bans government to raise fuel price.

With firm support from three coalition partners (PAN, PKB, and PPP), President SBY has to thank Golkar Party for its last minute support for Article 7 paragraph 6a. What price SBY has paid to Golkar? Well, some suspected on the pork barrel scheme between Demokrat and Golkar for the long-delayed decision on parliamentary threshold. Others suspected on possible cases, including tax investigations, etc.

Golkar and PKS were reluctant to support Demokrat-led coalition because they believe Demokrat would gain the most from direct cash assistance to be distributed to poor families ahead of 2014 election. Whose constituents will get the funding, how they will be perceieved. Demokrat, who has suffered from endless corruption cases, is seen the main beneficiary owner of raising fuel price through ‘purchasing’ supports from lower income groups assisted by funds diverted from fuel subsidies. Some suspected Demokrat and Golkar finally ‘cut deal’ on how the direct cash assistance will help bolster both at the grass root level.

Others suspected on side-deals, including in the lucrative oil and gas trading and other concessions between major parties, especially between Demokrat, Golkar, and National Mandate Party (PAN). It’s hard to imagine Golkar walked out empty handed from the fuel politics, especially because it was too much at stake for SBY to lose in the political showdown.

These concessions are deserved watching in the coming months. There are major ‘business deals’ underway, which needs strong political hands to get. We all know that these major parties have their hands in the ‘dirty’ oil and gas trading business. Look at how easy issues surrounding Petral disappeared in the past few weeks? Look at who wants to get more from the business? Business groups linked to Golkar Party are now the largest oil and gas traders, outside Pertamina, in the country….

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