Govt asked to lift fuel subsidy for export companies<\/p>\n
JAKARTA (JP): State oil and gas company Pertamina asked the
\ngovernment on Thursday to remove a fuel subsidy to export-
\noriented companies by requiring them to buy the fuel at
\ninternational prices.<\/p>\n
Pertamina president Baihaki Hakim said giving the subsidy to
\nexport-oriented companies was not fair because they sold their
\nproducts in foreign currencies.<\/p>\n
\"Much of the current fuel subsidy spending falls into the
\nwrong areas,\" Baihaki told reporters following the donation of
\nhumanitarian aid to the province of Aceh which was held in
\nconjunction with Pertamina's 43th anniversary.<\/p>\n
According to Pertamina, the government could save Rp 9
\ntrillion (US$947.36 million) in fuel subsidy spending each year,
\nif it forced export oriented companies to buy fuel at
\ninternational market prices.<\/p>\n
He said that without a Presidential decree Pertamina had
\nproblems persuading export oriented companies to start buying
\nfuel at international market prices.<\/p>\n
\"Our position now is difficult\"...the government tells us, \"do
\nyour best,\" but that is difficult,\" he said.<\/p>\n
Companies, he said, would pay no attention to Pertamina's
\nrequest, since what they sought was profit. \"Businessmen have all
\nkinds of tricks, like threatening mass layoffs; it is a concern
\nto us,\" he said.<\/p>\n
In May this year, Pertamina planned to order export oriented
\ncompanies to buy fuel at market prices, but strong opposition
\nfrom various industries caused the government to delay the plan.<\/p>\n
Under the plan, industries which export 50 percent or more of
\ntheir product would have to buy fuel at international prices.<\/p>\n
Then Minister of Mines and Energy Susilo Bambang Yudhoyono has
\nsaid that the government must first determine whether it was
\npossible to set two different fuel prices and how many industries
\nthe policy would later affect.<\/p>\n
He also said that the introduction of a such a policy must be
\ndone in consultation with various parties including industrial
\nassociations and the Finance Ministry.<\/p>\n
\"The idea of fixing fuel to market prices came from the
\nFinance Ministry,\" Baihaki went on.<\/p>\n
In its 2000 state budget, the government predicted fuel
\nsubsidy spending to reach Rp 22.46 trillion, but soaring fuel
\nprices and a weakening rupiah could send subsidy spending to over
\nRp 30 trillion.<\/p>\n
Baihaki said that the Finance Ministry was naturally
\ninterested in finding ways to reduce subsidy spending, especially
\nif it could reduce the amount given to the wrong recipients.<\/p>\n
Based on the State Audit Board's (BPKP) calculation, he said,
\nthe government could safe up to Rp 9 trillion a year, if export
\noriented companies bought fuel at international prices.<\/p>\n
\"This is a matter of national policy that needs to be
\nrevised,\" he said.<\/p>\n
But persuading export oriented companies is not sufficient
\nenough to make them abandon subsidized fuel, according to him.<\/p>\n
\"My job is now to urge (the government) to issue a
\npresidential decree to impose international fuel prices, so that
\nPertamina has a legal base,\" he said.<\/p>\n
At present, some companies are already buying fuel at
\ninternational prices, in particular foreign mining companies.<\/p>\n
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
\nsaid Tuesday that the government did plan to order export
\noriented firms to buy fuel at market prices.<\/p>\n
The decision came following protests by the fishing concern
\nDjajanti Group and PT Bayer Indonesia. They questioned why they
\nwere told to buy fuel at market prices while others had not.<\/p>\n
Purnomo was quoted as saying by the daily Bisnis Indonesia
\nthat the government would hence order the same to all export
\noriented companies to avoid discrimination.<\/p>\n
Baihaki also said that to ward off currency speculation,
\nPertamina would buy U.S. dollars through Bank Indonesia (BI) when
\nimporting fuel.<\/p>\n
He said that each month Pertamina spent an average of US$570
\nmillion for the imports of fuel.<\/p>\n
Previously Pertamina bought the U.S dollars through state
\nowned Bank Mandiri to finance the fuel imports.<\/p>\n
\"But Bank Mandiri is now having difficulties finding dollars,
\nso we buy it from BI,\" he said.<\/p>\n
However, the central bank, will only allocate the foreign
\nexchange we need and send it to Bank Mandiri, from which
\nPertamina then buys the U.S dollars, he explained.<\/p>\n
Pertamina finance director Ainun Na'im said that Pertamina and
\nBI had agreed to cooperate in reducing currency speculation when
\nthe company is purchasing U.S dollars.(bkm)<\/p>",
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