Pertamina could face fuel scarcity

Urip Hudiono, The Jakarta Post/Jakarta

With the year's fuel subsidy already spent and the House of Representatives only starting to deliberate the 2005 state budget revision next week, the nation risks jeopardizing its fuel supplies if PT Pertamina fails to get additional funds to import oil.

While the budget deliberation could take months to complete, the government in the meantime will only be disbursing up to Rp 3.3 trillion (US$347.19 million) of its emergency reserve funds -- about a third of the state oil and gas firm's monthly oil import needs.

Even for that purpose, the Ministry of Finance's director general of state treasury Mulia Nasution indicated on Friday the government had to first discuss the possibility of disbursing its emergency reserve fund for Pertamina with the House, though some House members have already given the green light to do so.

Pertamina is in dire needs of cash to import oil, having spent all the Rp 19 trillion in fuel subsidy funds allocated in the initial 2005 state budget.

"According to our calculations, the bulk of the funds have been spent as Pertamina also has to pay its obligations to the government," Mulia said.

Mulia, however, said the disbursement of additional fuel subsidy funds would be the government's priority, asserting it would arrange a meeting with the House as soon as possible.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro, meanwhile, previously said the government would help support Pertamina in securing at least 20 days worth of fuel supplies for the country.

But even the additional funds from the emergency reserve would unlikely be sufficient for Pertamina's needs, as the cash- strapped company usually needs between $800 million and $1.1 billion each month to finance the country's oil imports.

The 2005 state budget, which the previous administration drafted on an oil price assumption of $24 per barrel, only provided Rp 19 trillion in fuel subsidy funds for the whole year.

With world oil prices lately surging past $50, however, the government decided to hike domestic fuel prices by an average of 29 percent in March and proposed an oil price assumption of $35 per barrel in the budget revision, to cut the bloating fuel subsidy from Rp 60.1 trillion to Rp 39.7 trillion.

A delay in the government's fuel subsidy disbursement would mean that Pertamina would have to cover the cost of importing oil first, before later asking the government for reimbursement.

The House will begin its deliberation of the state budget revision next week -- but the longer it takes, the bigger Pertamina's financial needs will become.

Chairman of the House's Commission XI for financial affairs Paskah Suzetta said on Wednesday the government may directly use its emergency reserves for additional fuel subsidy funds before the deliberation process starts.

"The government can use it as long as it is under the close monitoring of the House," he said.

Paskah further said the House's deliberation of the budget revision would likely be a two-step process, taking into account the more urgent issues of additional fuel subsidy funds, and funds for the reconstruction of tsunami-affected Nanggroe Aceh Darussalam province.