Pertamina could suffer Rp 4t losses due to fuel

The Jakarta Post, Jakarta

State oil and gas company Pertamina could suffer up to Rp 4 trillion (US$433 million) in lost subsidies this year as a result of a difference of opinion of the projected total supply needed for the country as stipulated in the budget.

Under the current budget, the government will only provide subsidies for 52.7 million kiloliters of fuel this year, which is the government and legislators' projection of the national consumption for the period.

But, Pertamina said Thursday that its total fuel supply for the domestic market until the end of the year might reach between 56 and 57 million kiloliters or about 4 million kiloliters larger than the budget's projection.

The 4 million kiloliters of fuel will cost about Rp 4 trillion.

"Thus far, the House of Representatives has not yet agreed on the proposal to raise fuel subsidies. This means Pertamina will likely have to cover the shortfall," Pertamina's president Baihaki Hakim was quoted by Antara as saying on the sidelines of the working meeting with the House of Representatives's Commission VIII for mining and energy, environment and science and technology.

Baihaki recalled that during the deliberation on the current budget last year, he had told the House that the fuel consumption projection stated in the budget was too low and thus should be raised. But, the House insisted on the 52.7 million projection.

He said Pertamina was negotiating with the House to find a solution, citing that it was too burdensome for the state company to cover the entire shortfall. In its response, the House called for an audit on the fuel supply against the national fuel consumption for this year.

Baihaki also said Pertamina planned to sell some of its units through initial public offerings as well as issue bonds after 2005 to finance some projects.

The company is considering those plans as a result of mounting difficulties in obtaining loans from banks, Baihaki said.

He said Pertamina would need US$4.5 billion over the next five years to develop its oil and gas projects.

However, plans for the unit sales and bond issue remain at an early stage, he added. Pertamina will first have to discuss them with the government.