Pertamina obtains loans to finance fuel imports

Pertamina obtains loans to finance fuel imports

Bloomberg, Jakarta

State oil and gas company Pertamina has taken US$200 million in loans from Standard Chartered Plc., Citibank N.A. and Bank Central Asia to enable it to import more fuel to meet increased demand in the next few weeks.

The company signed the short-term import financing facility with the three banks yesterday, Pertamina said in an e-mailed statement. It didn't give details on the payment terms.

The loan will help Pertamina to ensure sufficient supplies of fuel, the statement said. Pertamina imports fuels such as gasoline at market prices and sells them at subsidized rates as part of a government effort to keep fuels affordable.

In May, Pertamina said its cash flow was at a "critical level" because it couldn't pass on higher crude oil costs to customers.

Pertamina said earlier this month it plans to raise imports of gasoline and diesel by as much as 4 million barrels until the end of December to boost inventories before festival holidays.

The company expects demand to rise during Idul Fitri later this month as millions of people return home to celebrate the end of Ramadhan fasting. Demand is also expected to rise during Christmas and New Year.

Indonesia doesn't have enough refining capacity to process fuels needed domestically. Even with all its refineries running at full capacity of about 1 million barrels per day, Indonesia, Southeast Asia's biggest oil producer, still imports about one- fifth of its oil products each year to meet domestic demand.