Pertamina augments supply for Greater Jakarta, West Java
Pertamina augments supply for Greater Jakarta, West Java
Leony Aurora and
Rendi A. Witular
The Jakarta Post/Jakarta
In a move to ease public concern, state oil and gas company
Pertamina unloaded more premium gasoline, diesel and kerosene on
Tuesday and urged gasoline stations in Greater Jakarta and West
Java to open around the clock.
"As instructed by President Susilo Bambang Yudhoyono,
Pertamina will supply fuel to meet public demand without imposing
any limitations," the company's president director Widya Purnama
said at the State Palace on Wednesday.
The President gave his assurance that the Ministry of Finance
would provide sufficient cash to pay for the demand, which was
already 10 percent higher than the 59.6 million kiloliter quota,
he said.
Pertamina had initially cut the fuel supplied to gasoline
stations on fears that the government could not provide an
additional subsidy.
Oil prices have climbed steadily in the past year, forcing the
cash-strapped government to quadruple the fuel subsidy from Rp 19
trillion (US$1.94 billion) in the initial budget to Rp 76.5
trillion in the revised version, with oil prices pegged at $45 a
barrel.
However, as oil hovers at around $60 a barrel at present, the
subsidy may skyrocket to over Rp 110 trillion, even reaching Rp
150 trillion, said Minister of Energy and Mineral Resources
Purnomo Yusgiantoro.
The President's populist decision to pour fuel into the
country will not solve the problem, commented Dradjad Wibowo, a
member of House of Representatives Commission XI overseeing
financial affairs.
The government has to drastically lower fuel consumption by 15
percent, the only measure deemed feasible in the immediate
future, he said.
"Raising fuel prices is not politically viable, while
increasing fuel production cannot be done in the short term," he
said. "The need for fuel will not stop, while we don't know how
far oil prices will rise."
Dradjad further said that the climbing global oil prices and
weakening rupiah against the U.S. dollar might lead Indonesia
into another crisis, albeit a smaller one than in 1997.
He added that the "double shocks" of soaring oil prices --
subsequent higher domestic fuel subsidies -- and weakening rupiah
might escalate further.
"We are seeing a vicious cycle, which may have a snowball
effect," said Dradjad, who is also a economist.
Fuel shortages caused panic recently, prompting the government
to buy a large amount of U.S. dollars to fund the fuel import,
which weakens the rupiah. As the rupiah slides, it will be more
difficult to fund fuel imports, which will result in further
shortages.
"Pretty soon we will see layoffs," said Dradjad, which would
mark another cycle, where companies are unable to pay loans to
banks and the rupiah will go down.
The legislator also lamented that the government did not
respond to the soaring oil prices and their consequences
immediately, even as it witnessed prices climbing.
"The government could have prepared the liquidity and
administration in the finance ministry earlier," he said. The
measures might have helped ease the burden on the rupiah and
prevent the fuel shortage.
Analysts and energy observers have long warned the government
to conduct measures to suppress energy use.
"Unfortunately the former and current Cabinets have not
prioritized energy conservation," he said.
The Jakarta Composite Index dropped 13.36 points, or 1.2
percent, to 1,117.81 on Wednesday on concerns that the increased
budget expenditure will further weaken the rupiah.