Fuel prices for industry to go up 15% for August
Leony Aurora, The Jakarta Post, Jakarta
Coal and oil companies have question the formula used to calculate fuel prices applied to the mining sector, as state oil and gas firm Pertamina has raised prices by more than 15 percent for August deliveries.
Indonesian Mining Association chairman Jeffry Mulyono said that the hike was more than expected and the association wished to observe the pricing structure.
"Pertamina is not transparent in explaining the increased prices," Jeffry, who also chairs the Indonesian Coal Mining Association, told The Jakarta Post on Tuesday.
The organizations will officially file questions regarding the fuel prices to the oil firm, he added.
Pertamina raised the price of diesel fuel to be used by oil and gas companies, the mining sector, as well as companies with a monthly usage of more than 500 kiloliters of fuel, by 15.6 percent to Rp 5,480 (56 U.S. cents) a liter from Rp 4,740 per liter for July deliveries.
The price of marine diesel fuel increased by 15 percent to Rp 5,240 per liter this month from Rp 4,560 a liter last month, while fuel oil rose to Rp 3,150 a liter from Rp 2,900.
Pertamina head of fuel division Achmad Faisal said that the new prices were based on the average prices of the Mid Oil Platts Singapore (MOPS) in the month previous to delivery.
"The formula is MOPS plus 15 percent, which covers transportation and distribution fees, and 10 percent in value- added tax," said Faisal.
He further said that the prices applied for August reflected the higher MOPS prices.
"If you look at it daily, the price may not seem to rise as much (as 15 percent) in the previous month," said Faisal. "However, if you average them in a month, it did rise."
Global crude oil prices hovered at $60 per barrel last month, rising to over $61 on Monday after the death of Saudi Arabian King Fahd and problems at a BP refinery in the U.S.
Pertamina, with government permission, has applied market prices for diesel fuel for export-oriented companies since July to ease subsidy pressure on the state budget.
Diesel fuel prices more than doubled from the subsidized Rp 2,200 charged before.
Pertamina has extended the application of market prices this month to Indonesian power producers that do not sell their output to state electricity firm PLN, manufacturers located in bonded zones and companies that switched from non-fuel products to fuel.
The prices are also effective for any additional allocation for companies with fuel demand of over 24 kl per month. The fuel allocations are based on the average monthly usage in the previous three months.
Major coal players have said that due to the new policy, production costs had increased by between $2 and $3 a ton. However, as global prices of the commodity stay strong, they have accepted the price hike.
Jeffry said that with the August prices, costs would climb by another 75 cents per ton. "Fuel now attributes 25 percent of total costs from about 18 percent previously," he said.
Domestic Fuel Prices for Industry ---------------------------------------------------------------- No. Fuel Type Market Price Market Price
per July (Rp/liter) per Aug. (Rp/liter) ---------------------------------------------------------------- 1. Premium gasoline 4,060 4,640 2. Kerosene 4,940 5,490 3. High speed diesel 4,740 5,480 4. Marine diesel fuel 4,560 5,240 5. Marine fuel oil 2,900 3,150 ---------------------------------------------------------------- Source: PT Pertamina