Thu, 25 May 2000

Pertamina delays plan to fix fuel prices

JAKARTA (JP): Minister of Mines and Energy Susilo Bambang Yudhoyono ordered on Wednesday state oil and gas company Pertamina to withdraw its plan to impose international prices on fuel sold to export-oriented companies.

"I have instructed Pertamina to delay the plan, as we still have to coordinate it with other parties," he told reporters.

Pertamina planed to implement the new price policy beginning next month and has already issued directives to various industries.

Under the new policy, industries, including the fishing sector, which exports 50 percent or more of their products, would have to buy fuel at international prices.

Diesel oil prices, for instance, will cost these industries US$250 per ton or Rp 2,000 per liter, as against Rp 600.

Responding to the policy, export-oriented industries, such as textile companies, filed strong protests to the government.

Java's textile association earlier threatened to boycott the policy through a production strike.

Protests also came from the Association of Indonesian Fishing Companies (Gappindo) which warned that the policy would lead local fishing companies to bankruptcy.

Bambang issued the statement following an outcry from the industrial community.

He said that his ministry should first discuss the policy with related ministries, such as the Ministry of Industry and Trade, the Ministry of Investment and State Enterprises Development and the Finance Ministry, as well as with various associations before implementing the controversial plan.

According to him, the government had to determine whether it was possible to set two different fuel prices and how many industries the policy would later affect.

He further said that Pertamina had no authority to regulate fuel prices, since they were under the central government's control.

"Pertamina has only the right to control the prices of its unleaded gasoline, Super TT and Premix," he added.

Bambang said that he understood Pertamina's intention to raise government's revenue through the policy. However, he said that any plan, regardless of its good intention, should first be discussed with the government.

"Not only with the Ministry of Mines and Energy but with other related ministries as well," he said.

Pertamina earlier said that the new policy was aimed at anticipating the ASEAN Free Trade Zone (AFTA), starting in 2003, which required all ASEAN members to revoke fuel subsidies. (bkm)