Oil consumption down after fuel price hike: Pertamina

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

Following the recent fuel price increase, the country's fuel consumption has declined by 16 percent compared to the previous month.

State oil and gas company Pertamina said in a statement on Wednesday that fuel consumption this month averaged 158,000 kiloliters per day, compared to last month's 189,700 kiloliters per day.

The decreasing demand has meant that fuel consumption has returned to a normal level. In the first two months of this year, the demand increased by 15 percent, due to uncertainty pertaining to the government's policy to increase fuel prices, thus causing people to stockpile oil.

"Pertamina hopes fuel consumption will remain at this level to help ease the strain on the company's budget as the crude oil price has risen to above US$50 per barrel," the company said in a statement.

Starting March 1, the government increased fuel prices by an average of 29 percent, promising to redirect part of the money saved from slashing the fuel subsidy into programs to assist the poor. Most of the fund will be allocated for education programs, the purchase of subsidized rice for the needy, rural infrastructure projects and health programs.

The rising global crude oil price has burdened the state budget since Indonesia imports almost a fifth of its domestic fuel consumption of 1.1 million barrels per day.

Pertamina said kerosene demand has increased by 20 percent, and suspects that some suppliers have bought the kerosene to be mixed with fuel to gain profit.

"Pertamina must increase its surveillance of kerosene distribution," the statement said.

The government has maintained the subsidy for kerosene, the retail price of which is Rp 700 (7.5 U.S. cents) per liter, as it is mostly used by the poor.

Since the introduction of the new fuel prices, Pertamina has sanctioned 162 gas stations nationwide that were found to be mixing the fuel or stockpiling the supply.

"Pertamina is building both civil and criminal cases against these perpetrators and will continue to raid gas stations to maintain the distribution line," the company said.

Fuel Consumption ----------------------------------------------------------------

Feb 2005 March 2005 Total 2004

(in kiloliter) ---------------------------------------------------------------- Automotive diesel fuel 81,900 57,800 26.9 million Premium 45,100 40,200 16.2 million Kerosene 31,400 39,500 11.7 million ----------------------------------------------------------------