Pertamina prepared for possible run of fuel

JAKARTA (JP): State oil and gas company Pertamina assured the public on Thursday that it had enough fuel to handle a possible run arising from the government's decision to raise fuel prices by an average of 30 percent.

"Pertamina is ready to respond to a sudden increase in fuel demand within the next few days," said Pertamina president Baihaki Hakim on the sidelines of a hearing with legislators to discuss the new oil and gas bill.

"Our national fuel stock is safe for 22 days, our refineries are operating at full rates, and there is no problem with our fuel tankers," he said.

The government plans to raise fuel prices by an average of 30 percent starting today, yet the exact timing remains unclear as it wants first to study the impact on society.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Thursday the fuel price hike would be postponed, pending a review in the security situation.

Newly appointed Minister of Finance Rizal Ramli said that the decision on the implementation of the new fuel price would be decided on Friday (today).

Under the plan, only fuel sold to the public will be increased.

The price of gasoline will be raised to Rp 1,450 (about 12.9 U.S cents) per liter from the current price of Rp 1,150 per liter, automotive diesel oil to Rp 900 from Rp 600, and kerosene to Rp 400 from Rp 350.

In the past two days, Baihaki said, Pertamina had recorded a surge of between 10 percent to 15 percent in fuel demand in several cities.

"This is only temporary, as people are trying to get the fuel while it is cheap," he explained.

A sudden delay of the fuel price hike, however, could extend the run period that Pertamina had to cope with.

"For Pertamina this (delay) shouldn't be a problem, we have enough stock. It's a matter of who can hold one's breath the longer; a run can't last forever, there is a limit," he said.

According to him, based on earlier experience a run lasted for only about a week.

On the management side, he continued, Pertamina had tightened coordination with its distribution units to closely monitor fuel demand.

"We've taken concrete steps, there'll be coordination among all distribution units, or else what I said in Jakarta won't have been acted upon," he said.

However, he warned that fuel smuggling was of greater concern to Pertamina than a run on fuel.

The money wasted on subsidized fuel smuggled out of this country, had been the center of debate during the revision of this year's state budget.

The House of Representatives' budget commission charged that rampant fuel smuggling distorted the fuel consumption data the government had used to calculate its subsidy expenditure.

Data from Pertamina forecasted a fuel consumption of 54.8 million kiloliters for this year. This would amount to a subsidy of around Rp 60 trillion, providing fuel prices were hiked by an average of 30 percent as of June 15.

Legislators queried the figure, stating that consumption was only 44 million kiloliters when industry was operating at full production before the economic crisis hit.

Both sides later settled on a consumption level of 52.7 million kiloliters, or a level equal to last year's consumption. (bkm)