The technical processes and financial conditions of each country also result in different prices. This is due to differences in assumptions, formulas, tax rates, data set, exchange rate, etc. In fact, using the same formula can produce different prices if the data input is different.
The difference in assumptions, especially if assuming the price of crude produced in Indonesia is zero or free, of course will produce a different selling price. In the fuel price structure, the average cost of crude is around 55-70 percent of the total production cost. Therefore, if the price of crude is assumed to be zero, then the price of fuel will be very cheap and there will be no subsidies.
The data shows that the price of fuel between countries varies. This is because the cost structure of fuel supply between one country and another is not always the same. OPEC publications, for example, show that the structure of fuel production costs in the Organization for Economic Cooperation and Development (OECD) and G7 countries is different. The same goes for India and China.
In general, the fuel price structure is divided into three main components, namely, the cost of crude, corporate profits, and taxes. Crude price and taxes constitute the largest proportion. In OECD and G7 countries, the portion of the tax paid by consumers is 49 percent and 51 percent, respectively, of the total fuel price. Meanwhile, the tax portion in the fuel price structure in the USA is 19 percent, Canada 33 percent, Japan 38 percent, Korea 43 percent, France 60 percent, Germany 57 percent, Italy 60 percent, UK 59 percent, India 51 percent, and China 38 percent.
In Indonesia, the formula for calculating fuel prices is basically already regulated as an “administered price”. Therefore, if there are still parties who think that the government and Pertamina are not transparent in terms of fuel prices calculation, this is indicative of the need for more intensive and massive public education campaign on this matter.
Currently, the formula for calculating the price of fuel in Indonesia is regulated under ESDM Minister Regulation (Permen ESDM) 20/2021 on the calculation of the retail selling price of fuel. This regulation replaces the Permen ESDM 39/2014 which has been amended several times, most recently with Permen ESDM 40/2018 on the sixth amendment to Permen ESDM 39/2014.
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Based on this regulation, the retail price of subsidized/JBT fuels is determined by the base price formula plus VAT, minus subsidies, and plus fuel tax. Meanwhile, the retail price for JBKP is determined with the base price formula plus additional distribution costs in the assignment area of 2 percent of the base price, plus VAT and fuel tax.
In addition to regulating the retail price of subsidized fuel, Permen ESDM 20/2021 also regulates the retail price of general fuel, calculated and determined by the business entity based on the highest price formula consisting of the base price, plus VAT and fuel tax and a maximum operating margin of 10 percent of the base price.
The base price of fuel is made up of acquisition costs, distribution costs, storage costs and margins. The calculation of the base price for each month is determined using the average market index price and the Rupiah-US dollar exchange rate for the period of day 25 of the previous month to day 24 of the current month for the calculation of the base price for the following month. The base price formula explains why the market price of fuel calculation between the ESDM Minister and Finance Minister differs. The Finance Minister used a database from June 25-July 24, 2022, while the ESDM minister uses data from July 25-August 24, 2022.
Thus, the accusation that the government and/or Pertamina are not transparent is more due to the limited information available to the public. This calls for more public education and objectives, proportional information on how to calculate fuel prices. In the perspective of public policy, the dialectic between policymakers and the public is common. Therefore, differences in views, data, and information, including regarding the price of fuel is normal and only needs to be clarified so that it can generate enlightenment for all parties. (DR. Komaidi Notonegoro, SE.ME)