Government fights fuel smuggling activities

JAKARTA (JP): The government will establish a joint team comprising state oil and gas company Pertamina, the military, the police force and the General Attorney's Office to fight rampant fuel smuggling activities, a senior government official says.

Inspector General Muzani Syukur of the Ministry of Mines and Energy said last week that the team would not only investigate fuel smugglers but would also bring them to court.

"There'll be an investigating team, a supervising team and an execution team," Muzani announced after attending a meeting between Minister of Mines and Energy Susilo Bambang Yudhoyono, Pertamina executives and military senior officers.

At the very least, he said, it would help increase transparency in Pertamina's distribution of subsidized fuel.

The state company has come under fire during the past few weeks over reports of alleged fuel smuggling activities.

Analysts have said that Pertamina, which is responsible for the distribution of fuel, should have long known about the illegal activity.

Pertamina, however, said it was beyond its power to control fuel usage once the state company sold the fuel to the industrial market.

Muzani said the new team would replace another team which Pertamina earlier establish with the Coordinating Agency to Support the Strengthening of National Stability (Bakorstanas).

The old team, which he called Bamipal, focused only on irregularities of fuel usage at sea and broke up after the government dissolved Bakorstanas last February, Muzani added.

He said that Pertamina in cooperation with Bakorstanas had intended to only study the misuse of subsidized fuel by ship owners, before cracking down on them.

"The new team might start working next month," Muzani said, adding that it would work closely with the Ministry of Communications and the Ministry of Industry and Trade.

Bamipal former head Soenaryo Koesman said his team had found irregularities amounting to some Rp 263 billion (US$33 million) between February 1999 and February this year.

He attributed the losses to 141 shipping companies that had misused the subsidized fuel.

According to him, the shipping companies were licensed for domestic routes, but took foreign routes instead, which was subject to fuel priced at international rates.

Director of supply and domestic trade for Pertamina Harry Poernomo said the shipping companies had paid the difference in price to Pertamina.

"Most of them were cargo ships carrying containers," he said, adding that Pertamina did not seek legal action against them as they were its customers.

Pertamina plans to increase the price of diesel fuel sold to businesses to the international level as part of its program to reduce its fuel subsidy.

Diesel fuel is sold domestically for Rp 600 per liter as compared to Rp 2,000 per liter on the international market.

The move, however, sparked criticism from the Association of Indonesian Fishing Companies (Gappindo), saying it would lead the local fishing industry to bankruptcy.

But Harry said Indonesia needed to gradually eliminate the fuel subsidy in anticipation of the ASEAN Free Trade Zone Area (AFTA), which comes into effect in 2003.

"There will be no subsidy once our market is open," he said.

He further said that Pertamina would appoint an independent team of surveyors to verify the exact fuel demand for industry.

"I expect them to start working on May 15," he said.

Pertamina has said that an oversupply of fuel might have boosted fuel smuggling activities during the past few months.

Harry said the independent surveyors would work for an indefinite period to determine how much fuel Pertamina should distribute to the industrial market.

"So buying fuel from us will be a little bit tight next time," he said. (bkm)