Pertamina asked to stabilize fuel prices in all major cities

JAKARTA (JP): Minister of Mines and Energy I.B. Sudjana has ordered state oil and gas company Pertamina to stabilize the fuel and lubricant market in all major Indonesian cities following reports of supply shortages and price increases.

Pertamina launched a market operation Wednesday to stabilize lubricant prices in Jakarta and West Java by supplying more lubricants to the gas stations in these areas, but the minister has asked the company to expand this to all major cities.

"The government has not so far increased fuel and lubricant prices. Prices have been rising due to the activities of unethical speculators," Sudjana said after an Idul Fitri celebration at the ministry office.

He believes some people are stockpiling large quantities of lubricants and fuel, especially kerosene, to profit from the situation following rumors that Pertamina did not have enough lubricants and fuel and would soon raise prices.

Observers say a rush on fuel and lubricants was also prompted by a recent agreement between the International Monetary Fund and the government to raise fuel prices in a bid to reduce the fuel subsidy.

According to the agreement, fuel prices will be raised starting April.

"The President has not yet decided to increase fuel prices," Sudjana said.

Sudjana said he had ordered Pertamina to find out who was stockpiling lubricants and fuel and report them to the police.

Police and the military have said speculators could be charged with subversion.

Several major cities reportedly ran short of lubricants in the past several weeks, leading some gas stations to raise prices.

The price of Pertamina-made Mesran Prima lubricant rose to between Rp 7,500 (63 U.S. cents) and Rp 11,000 per liter can some days ago at several Jakarta gas stations. Its previous price was Rp 5,700.

Kerosene has also reportedly risen to Rp 1,000 per liter in many areas although its Pertamina-set retail price is Rp 280 per liter.

Pertamina president Soegianto has said Pertamina does has enough fuel and lubricants in stock, calling on the public to stop stockpiling.

He said lubricant sales rose 70 percent in January over the December figure despite the continued economic slowdown. This indicates that people are stockpiling.

Pertamina data says the country's demand for lubricants has reached 400,000 kiloliters per year with a growth rate of 5 percent per year. More than 90 percent of lubricants are supplied by Pertamina lube plants. (jsk)