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.