Govt moves to secure fuel supply

Govt moves to secure fuel supply

Urip Hudiono, The Jakarta Post/Jakarta

The government disbursed on Friday Rp 9.3 trillion (about US$963
million) to PT Pertamina so that the state oil and gas company
could increase the domestic fuel supply.

The amount consisted of Rp 8.7 trillion for the May subsidy,
and Rp 617 billion of unpaid fuel subsidies from 2003, a media
statement from the Ministry of Finance said on Friday.

The government's move is seen as a response to the prevailing
threats of a fuel shortage, which have been looming large in the
past weeks.

Ministry's Director General for Treasury Mulia Nasution said
earlier in the day, with the House Budget Commission having
agreed on the revision to the 2005 state budget -- which among
others sets aside a fuel subsidy allocation -- the government
would no longer hesitate in disbursing the funds to Pertamina.

Under the state budget revision, the Commission has agreed to
increase this year's fuel subsidy to Rp 76.5 trillion, about four
times higher than the initial projection of Rp 19 trillion. The
2005 budget revision assumes an average annual oil price of $45
per barrel, in comparison to the initial assumption of $24 a
barrel.

"With regard to the (fuel subsidy) disbursement, we'll try to
do it as soon as the bills (from Pertamina) come in," said Mulia.

Friday's move brings the total fuel subsidy that has been
disbursed to Pertamina this year to Rp 32.3 trillion.

Pertamina is the country's sole company tasked to secure fuel
supplies for domestic use, with the financing needs coming from
the annual state budget.

It is not uncommon however for Pertamina to struggle
financially to keep the fuel supply at a safe level. The state
company claims that is a result of the government's delay in the
subsidy payments.

Domestic fuel stocks at present stand at 17.5 days, while the
ideal is 22 days.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said the disbursement would likely be enough to boost the stocks
to 18.5 days by next week.

Pertamina needs some $1.1 billion per month to import fuel to
secure domestic supply, estimated at about 1.15 million barrels
per day (bpd).

The oil firm imports 300,000 bpd of crude oil to be processed
at its refineries, which have a total capacity to process one
million barrels of crude oil per day. To fulfill domestic demand,
Pertamina also needs to import 400,000 bpd of already refined
fuel.