Thu, 30 Nov 2000

Government urged to lift restrictions on fuel in Irian Jaya

JAKARTA (JP): Irian Jaya Governor Yaap P. Solossa has urged President Abdurrahman Wahid to lift restrictions on fuel to eastern areas of the country and to abolish discriminative diesel oil pricing imposed on particular industrial users in that region.

"I do not understand why the price of automotive diesel oil for particular industrial users in Irian Jaya is set at Rp 1,200 (12 U.S. cents) per liter or twice as high as the government- fixed price," Solossa told a meeting with Hari Purnomo and Hari Purwanto, senior executives of state oil company Pertamina on Tuesday.

Solossa said several industrial companies in his province might be forced to stop production and make mass layoffs soon because the punitively high price of diesel oil had made their operations economically unviable.

"For example, PT Biak Minajaya fisheries company in Biak is now in the process of laying off 1,500 of its 2,000 employees because its fish production has fallen steeply due to the grounding of many boats," he said.

The governor warned that mass layoffs at this point in time when the political situation in Irian Jaya is heating up as a result of stronger demand for independence would only make the situation murkier.

No further details were immediately available as to why Pertamina doubled the price of diesel oil for some industrial users in Irian Jaya, including PT Biak Minajaya, since Nov.20.

A letter dated Nov. 17 from P.H. Sitompul at the Jayapura office of Pertamina's domestic marketing department stated that as of Nov. 20, the price of diesel oil for the Djajanti Group would be fixed at Rp 1,200 per liter.

Sitompul explained in his letter that the decision was based on a recommendation from the Pertamina domestic marketing director dated Nov. 15 and a letter from the Integrated Team for the prevention of fuel misuse.

The meeting between Governor Solossa and Pertamina officials in Jakarta was also attended by Sunaryo and Ramawi of the Integrated Team and Rony Sikap Sinuraya of the Djajanti Group.

Meanwhile, Pertamina spokesman Ridwan Nyak Baik told The Jakarta Post that the Rp 1,200 price was set after a consultation between Pertamina and export-oriented industrial users.

Baik acknowledged that the price was twice as high as the government-fixed price because the former was based on dollar terms.

"But the special price is voluntary in nature and was set upon prior agreement with the industrial user," he said.

But Biak could not explain as to where else industrial users could procure diesel oil if they did not want to pay the price because Pertamina holds the fuel monopoly in the country.

Governor Solossa said the government should have realized how difficult it was to attract investors to the least-developed area of eastern Indonesia due to inadequate basic infrastructures.

"Imposing discriminative fuel pricing on companies which have invested a great deal in Irian Jaya will not only make it more impossible to woo new investors. Even existing investment ventures which employ tens of thousands of workers may flee the province," Solossa said.

Separately, Hadi Budoyo, a director of the Djajanti Group, said on Wednesday that the doubled diesel oil price for his group was entirely discriminative.

"Many other industrial companies in Irian Jaya, including export-oriented firms such as plywood company PT Wapoga in Biak and PT Usaha Mina fisheries company in Sorong, have been spared the discriminative pricing policy," Budoyo said.

Budoyo said if the discriminative diesel oil pricing was not lifted, PT Biak Minajaya may be forced soon to make mass layoffs of workers. (bkm/vin)