Big business may be stuck with bill to color code kerosene

Fitri Wulandari, The Jakarta Post, Jakarta

Large companies and factories that use kerosene may have to shoulder the cost of color coding subsidized kerosene for households under a new government plan, according to a minister.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that it was one of the options being considered so that the program was more more effective, and to help resolve the lingering kerosene shortages suffered by low-income households in several parts of the country.

"Pertamina (the state-owned oil and gas company) is unable to cover the cost. The government could cover the cost from the state budget, but we think it should be the responsibility of each company," Purnomo told reporters on Tuesday.

Purnomo said the proposal was still being discussed with related ministries. If the plan is agreed upon, each company will have to pay more for the kerosene.

Pertamina stopped the color-coding program earlier this year after telling the government it was not going to finance the program, but talks are still ongoing. At the time, kerosene for households was tinted green.

However, the company said it planned to resume the program and finance it temporarily after kerosene shortages increased in recent months.

Purnomo has said that the kerosene shortage was caused by price disparity between kerosene for households and business use.

The price for household kerosene was set at Rp 700 per liter (with a government subsidy), while the price of unsubsidized kerosene for big business is currently set at between Rp 1,800 and Rp 2,200.

This has prompted designated household retailers to sell their kerosene to companies at a much higher price.

Rachmat Drajat, Pertamina's deputy downstream director for business and marketing was quoted by Antara as saying the company plans to import a coloring substance from the United Kingdom.

The program is scheduled to resume in the middle of this month and target Greater Jakarta where kerosene shortages have been rampant.

According to Rachmat, it would take 14 days to ship from the United Kingdom.

The coloring substance costs Rp 5.75 per liter. It would cost Pertamina an estimated Rp 60 billion per annum to color some 84 million kiloliters of household kerosene.

Rachmat said the company plans to resume the program to prevent retailers from selling the household kerosene to companies or by using it as mixture for diesel fuel or gasoline.

Antara reported price of household kerosene has been skyrocketing due to the shortages. People now have to buy it for Rp 1,500 per liter.