New diesel oil policy needs govt approval
New diesel oil policy needs govt approval
JAKARTA (JP): A new policy requiring industries in the eastern
part of Indonesia to pay diesel oil at international prices will
not be applied until the government gives its approval, state oil
and gas company Pertamina said on Friday.
Pertamina's director of supply and domestic trade Harry
Poernomo admitted that Pertamina had plans to hike the price of
diesel oil to the international price level in the region, but he
said under the existing regulation the plan should be approved by
the government for implementation.
"It's simply a plan and needs ministerial approval," Harry
told reporters.
He was responding to sharp protests from the Association of
Indonesian Fishing Companies (Gappindo) against the planned hike.
According to Gappindo, an April 20 directive from Pertamina
meant that industrial users of fuel, including fishing companies,
would have to pay for Pertamina's diesel oil in American dollars
and at the international price.
Gappindo asserted that the policy would force many fishing
boats to stop operations and said it was against the government's
drive to attract investors to the country's least developed
areas.
Pertamina now sells diesel oil at Rp 600 per liter as against
the international price of about US$250 per ton, or Rp 2,000 per
liter.
Industry sources blamed Pertamina's new policy on recent
stories of smuggled fuel, where foreign ships allegedly bought
Indonesian subsidized fuel.
But Harry said it had nothing to do with the smuggling.
He said the plan was part of the country's preparation to
gradually phase out fuel subsidies in anticipation of the ASEAN
Free Trade Zone (AFTA) starting in 2003, which requires all ASEAN
countries to revoke fuel subsidies.
ASEAN groups Indonesia, Malaysia, Singapore, Thailand,
Myanmar, the Philippines, Vietnam, Brunei Darussalam, Laos and
Cambodia.
"There will be no subsidies once our market is open," he said.
He said Pertamina was seeking to gradually reduce fuel
subsidies for large industries, not only in the eastern part of
Indonesia but across the nation.
"That includes industries with foreign investment, export-
oriented companies and those operating in bonded trade zones,"
Harry said.
He said that Pertamina had recommended the plan to the
minister of mines and energy, but thus far the ministry had given
no definitive response.
Asked when Pertamina expected to start reducing fuel subsidies
for large industries, he answered "it might very well be this
year".
The government planned to raise fuel prices by an average 12
percent in April, but mounting public opposition forced President
Abdurrahman Wahid to delay the plan.
Raising fuel prices is part of an agreement with the
International Monetary Fund (IMF) in exchange for obtaining the
fund's financial bail out.
The IMF asserted that Indonesia needed to reduce spending on
subsidies and said it would also encourage energy conservation as
well as diversification.
Analysts have blamed the subsidized fuel prices for nourishing
fuel smuggling activities. (bkm)