House pressures government to combat fuel smugglers

By Reiner S.

JAKARTA (JP): The House of Representatives is exerting strong pressure on the government to combat the country's notorious fuel smugglers believed to be backed by influential people.

In a four-day debate between the House state budget task force and the finance ministry last week over the government proposal to raise fuel prices, legislators launched for the first time strong criticism at government impotence in curbing the lucrative fuel smuggling business.

"The House wants the government to seriously combat fuel smugglers," said head of the House budget task force Benny Pasaribu.

During the 32-year rule of president Soeharto, the House had been merely a rubber-stamp legislature of government policy. But it has now changed.

"For many years the country has been robbed by fuel smugglers. It must be stopped now. We must dare to make a new breakthrough," said legislator Samuel Koto.

The government via the state budget has allocated a massive fund to subsidize fuel products. For 2001, the fuel subsidy totals Rp 53.7 trillion. But legislators believe that much of the heavily-subsidized fuel products has been smuggled out of the country due the price difference at home and in neighboring countries.

"Even fishermen are no longer fishing for fish, but they're smuggling diesel," Samuel said, adding that out of the country's 7,000 licensed fishing vessels, some 5,000 were not being used for fishing activities but fuel smuggling.

In the country's five-year development program called the Propenas, the fuel subsidy is to be completely phased out in 2004, which would effectively end fuel smuggling. This is part of the government agreement with the International Monetary Fund, which has been providing an economic bailout loan to the country in the aftermath of the 1997 financial crisis.

But the House budget task force does not want the government to wait until 2004. Legislators say that the government must immediately start taking serious action to fight fuel smugglers to help minimize the subsidy.

For a start, legislators insist that the government comptroller or BPKP must audit the state oil and gas company Pertamina every month. So far, although BPKP has stationed its own people in Pertamina, it only conducts an audit at the end of the year.

"The audit usually starts in December and is only completed in seven months," said director general of financial institutions of the finance ministry Darmin Nasution.

"The audit must be made monthly to help minimize abuse, and at the end of the year we must assign BPK (the Supreme Audit Agency) to conduct the full audit. Pertamina has long been regarded as untouchable," said legislator F.X. Sumitro.

The government has formed a special team to curb fuel smuggling activity. But so far, the outcome is not significant.

One member of the team told the House that in the first six months of this year, the team had only managed to catch 26 vessels trying to smuggle fuel products out of the country with a total volume of only 18,105 kilo liters.

"It is difficult to curb fuel smuggling in this vast archipelago (with a vast shoreline)," he said.

Pertamina condemned

Legislators believe that the domestic fuel consumption volume proposed by Pertamina to the government does not equate with real domestic demand but has been manufactured in such a way so as to accommodate a certain volume for smuggling activities.

The consumption volume would determine the amount of subsidy to be allocated by the government.

Pertamina initially set the domestic fuel consumption volume for 2001 at more than 56 million kilo liters on the grounds that consumption volume during the past four months had already reached 18.3 million or a monthly average of 4.58 million kilo liters.

Pertamina said that the figure was collected from its various distribution units in the country and should reflect the real domestic consumption volume.

"But we cannot trust Pertamina data. This is not the real figure. We appeal to Pertamina to provide the real figure," said legislator Engeline Pattiasina.

She pointed out that according to a survey conducted by Sucofindo in 1996, around 30 percent of fuel volume allocated for the industrial sector might have been smuggled out of the country.

Meanwhile, Benny questioned the increase in domestic fuel consumption volume from 44.35 million kilo liters in 1996 when the economy was booming to 47.33 million kilo liters in 1998 when the economy contracted drastically by nearly 14 percent.

Pertamina did not give an appropriate response to the legislators query.

Legislators also believe that certain people within Pertamina have taken part in fuel smuggling operations.

Although the House budget task force finally approved the government proposal to raise fuel prices by an average of 30 percent in the middle of June, the legislators seem to have managed to make their point clear to the government during the four-day debate that the House will be closely monitoring government efforts to fight rampant fuel smuggling.

The budget task force has also assigned the House commission VIII on mining and energy to supervise government efforts.