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.