Pertamina admits facing cash flow problems
JAKARTA (JP): The president of state oil and gas company Pertamina admitted yesterday that importing fuel and crude oil for its refineries was causing the company cash flow problems because of the sharp depreciation in the value of the rupiah against the U.S. dollar.
He said that the recent fall in the value of the rupiah had significantly increased the subsidy required to keep fuel prices constant in rupiah terms.
"The problem has arisen because Pertamina has not been reimbursed by the government for the fuel subsidies it has spent for the past two months," Soegianto said after a ceremony to hand over a Rp 1.9 billion (US$190,000) donation to cooperatives owned by students from 28 universities throughout Java.
He refused to reveal the size of the outstanding subsidy payments owed by the government, but analysts put them in the region of Rp 1.6 trillion. The 1998/1999 state budget allocates Rp 9.5 trillion for fuel subsidies in the current fiscal year.
"It should be noted that the subsidy is not for Pertamina but for fuel consumers," Soegianto said, adding that the company, as the sole distributor of fuel oils, had used its own money to pay for recent fuel and crude oil imports in full.
He said that Pertamina earned Rp 2.2 trillion from the sale of fuel each month but had to spend Rp 3 trillion to import fuel and crude oil to feed its refineries.
Although Indonesia is a net oil exporter, it has to import between 15 and 20 percent of its annual fuel consumption of 52 million kiloliters and 70 million barrels of crude oil to feed its refineries.
Soegianto said the company's cashflow problem had been exacerbated by the failure of some large private clients, including the recently bankrupted private air carrier PT Sempati Air, to pay their debts.
Sempati, which is owned by former president Soeharto's youngest son Hutomo Mandala Putra and Soeharto's crony Mohammad "Bob" Hasan, owes Pertamina Rp 50 billion in unpaid aviation fuel bills.
"We are now trying to collect the credit arrears," Soegianto said.
Separately, Minister of Mines and Energy Kuntoro Mangkusubroto confirmed yesterday that Pertamina was facing financial difficulties.
"I would be lying if I said that the company was not having cash flow problems," he said.
Kuntoro said he had discussed the problem with Minister of Finance Bambang Subianto, who said Pertamina had not been reimbursed because the Development and Finance Control Board (BPKP) had yet to finish an audit of the company.
"You have to understand that bureaucracy cannot always work speedily," Kuntoro said.
Kuntoro hinted that the delay in reimbursement by the Ministry of Finance may also be linked to the further plunge in the value of the rupiah against the U.S. dollar. Any weakening in the national currency causes the fuel subsidy to rise sharply in rupiah terms.
He said the Rp 9.5 trillion allocated by the government in the state budget was based on a projected crude oil price of US$14.5 per barrel and an exchange rate of Rp 6,000 per dollar throughout the current fiscal year.
The exchange rate has so far averaged more than Rp 10,000 per dollar this year.
"The fuel subsidy increases by Rp 5 trillion every time the exchange rate declines by Rp 1,000 against the dollar," he said.
Soegianto added that Pertamina also faced difficulty securing imports because most Indonesian letters of credit (L/Cs) were rejected overseas.
He said even L/Cs issued by state banks were being rejected overseas.
"If L/Cs issued by state banks are turned down then we have to open our L/Cs through foreign banks," Soegianto said. (jsk)