New diesel oil policy rattles fishing companies

New diesel oil policy rattles fishing companies

JAKARTA (JP): Industrial users of diesel oil, notably fishing
companies, in eastern Indonesian areas, are shocked by a new
policy of state oil company Pertamina which will fix the price of
diesel oil at the international level starting next month.

The Association of Indonesian Fishing Companies (Gappindo)
said on Thursday that if the new pricing policy was imposed, many
fishing boats might be forced to stop operations as the measure
would more than triple the cost of the fuel.

"This pricing policy will sabotage the government's program to
optimize the development of marine resources, one of the
country's largest earners of foreign exchange," Gappindo's
chairman Sutara Martadisastra said.

Sutara was commenting on an April 20 directive from
Pertamina's logistics center in Jayapura, Irian Jaya, that
requires all industrial users, including fisheries and other
export-oriented companies, which use tanker boats or barges to
procure diesel oil from Pertamina depots, to pay for the fuel in
American dollars and at the international price level.

The directive did not specify the reason behind the new policy
but industry sources immediately blamed it on the recent
controversy set off by the uncovering of large scale smuggling of
diesel oil and kerosene from Jakarta and other islands to foreign
countries.

Export smuggling has become greatly lucrative, especially in
the wake of the recent rally of international oil prices, as
domestic fuel oil in the country is still subsidized.

Pertamina now sells diesel oil at Rp 600 per liter, compared
to the international price of about US$250 per ton or Rp 2,000
per liter.

Sutara said the impact of new pricing policy would be
devastating, especially for fishing companies which have to
procure diesel oil in tanker boats or barges because their
processing plants and operational bases were mostly located far
from Pertamina depots.

"As fuel accounts for 40 percent to 60 percent of the
operational costs of fishing companies, the new policy will drive
many companies out of business with all their economic and social
implications," he added.

Sutara maintained that the diesel oil pricing policy was
entirely against the government's drive to attract investors to
the least developed eastern Indonesian areas.

"It is an anomaly that while the government is offering import
duty reliefs and tax incentives for investment ventures in
eastern Indonesian areas, Pertamina is punishing industrial users
of diesel oil in these areas," he added.

Gappindo said the measure was not the most effective way of
preventing export smuggling but it might instead kill the fishing
industry in eastern Indonesian areas.

The association pointed out that fishing, besides mining and
plantations, was the largest foreign exchange earner for the
country, especially after the economic crisis since late 1997.

"We, therefore, strongly urge the government to cancel
Pertamina's new diesel oil pricing policy which is scheduled to
be implemented next month," Sutara added.