Pertamina claims overpayment due to price differences

Pertamina claims overpayment due to price differences

Leony Aurora and Urip Hudiono, The Jakarta Post, Jakarta

A cost difference of Rp 3.64 trillion (US$364 million) in 2004's
fuel subsidy discovered by the Supreme Audit Agency (BPK) was
caused by a different price basis applied in the calculations,
says state oil and gas firm PT Pertamina.

The difference lies in the price applied when Pertamina buys
the crude portion of a contractors' domestic market obligation
(DMO) and the global price used when it is exported, the
company's finance director Alfred Rohimone said on Tuesday.

Pertamina sets off the subsidy against revenues based on the
DMO price, although the export price is higher, and transfers the
additional revenues to the state.

"The revenue goes to the government as the crude is exported,"
said Alfred.

Pertamina's chief controller Wahyu Susminto said that this
procedure was required by the Oil and Gas Upstream Regulatory
Agency (BP Migas).

"We're only following the standard procedures," he said.

In its audit on last year's fuel subsidies, the BPK found
indications that at Rp 80.42 trillion, the subsidy may have been
overpaid by Rp 3.64 trillion. The government and Pertamina have
so far only acknowledged that Rp 936 billion will be revised
pending further verification of the audit results.

Elsewhere, the Ministry of Finance's Treasury Director
General, Mulia Nasution, said the government would account for
any overpayment in last year's fuel subsidy.

"If it turns out that we have indeed paid too much, then we
will carry it over to this year's account," he said, adding that
the Ministry of Finance and the Ministry of Energy and Mineral
Resources always verified Pertamina's requests for fuel subsidy
payments, as well as its outstanding obligations to the
government, before disbursing the money.

Mulia said Pertamina had recently requested another Rp 14
trillion in subsidy payments for this month.

"We are still in the process of verifying it. The figure is
what they are asking for -- the actual disbursement may be
lower," he said.

As of August, the government had disbursed Rp 78 trillion out
of this year's total fuel subsidy of Rp 89.2 trillion.

Meanwhile, Pertamina's president director Widya Purnama said
on Tuesday that the company's asset revaluations had been
completed, with total equity and liabilities standing at Rp 143.55
trillion and the government's participating capital at Rp 106.05
trillion.

According to a finance ministry decree on Pertamina's
preliminary opening balance, which was issued on Sept. 21, the
company's debts to the government amounting Rp 11.8 trillion will
be converted into short-term debts.

The decree also removes liquefied natural gas (LNG) plants in
Arun, Aceh and Bontang, East Kalimantan, from Pertamina's list of
assets. The management of the LNG plants, which are worth Rp
29.17 trillion in total, will be decided on later by the
government.

Pertamina requires an opening balance after its status was
converted into that of a limited liability company two years ago
to, among other things, arrange loans and issue bonds.