7 Pertamina officials arrested on fuel smuggling charges
7 Pertamina officials arrested on fuel smuggling charges
The Jakarta Post, Jakarta
The police have arrested seven officials of state-controlled oil
and gas company PT Pertamina and a Singaporean citizen for
involvement in the smuggling of subsidized fuel products to
neighboring countries.
National Police chief Gen. Sutanto said on Thursday that the
police had also seized five Indonesian-flagged ships and three
foreign-registered vessels used in the fuel smuggling.
Sutanto declined to disclose the names of the suspects, but
said that they were part of the fuel smuggling networks operating
in Surabaya, East Java; and Makassar, South Sulawesi.
President Susilo Bambang Yudhoyono said that the government
would intensify its efforts to curb fuel smuggling as part of its
package of economic measures announced on Wednesday to help
resolve the country's current economic problems.
The current government fuel subsidy policy, which leads to
relatively low fuel prices at home compared to prices on the
international market, has made it profitable for smugglers to
illegally export Indonesian fuel products.
Rampant fuel smuggling is seen as one of the major factors causing
fuel shortage in many parts of the country, forcing Pertamina to
import more fuel to meet domestic demand and consequently
increasing budget spending on fuel subsidies.
The expensive fuel subsidies now represent a major threat to
the sustainability of the state budget due to soaring
international oil prices.
Although Indonesia is an oil producing country, it still has
to import part of its fuel needs due to declining production at
home amid a lack of investment in new oil fields.
Increasing doubts over the ability of the government to cover
the widening state budget deficit has put strong pressure on the
rupiah, which early this week plunged to a four-year low of
around Rp 11,000 per U.S dollar.
Economists have urged the Susilo administration to immediately
raise fuel prices and reduce subsidies in a bid to ensure
budgetary sustainability.
Experts have also said that eliminating the fuel subsidies, or
reducing them significantly, would also be effective in curbing
fuel smuggling as it would no longer be profitable.
As a vast archipelagic nation, it is difficult for law
enforcement agencies to effectively prevent fuel smugglers from
exporting the heavily subsidized fuel products to neighboring
countries. The problem is also compounded by widespread
corruption in these agencies.