Pertamina raises supplies but long queues remain

The Jakarta Post, Jakarta

Even though state oil and gas firm PT Pertamina has increased fuel supply for the domestic market -- from its quota of 184,000 kiloliters (kl) per day to 194,000 kl -- long queues at gasoline stations and kerosene depots can still be seen in some parts of the country.

Pertamina's trading and marketing director Ari Soemarno said on Thursday during a hearing with the House of Representatives Commission VII on energy and mineral resources that the firm could not increase the supply to meet domestic market demand, as it would surpass the quota of 59.6 million kl this year.

"From January to June, we have supplied 184,000 kl per day but the demand keeps increasing," he said. "So long queues (at gas stations) are not caused by a fuel supply shortage."

In Semarang in Central Java, Makassar in South Sulawesi and East Nusa Tenggara, people had to queue to buy kerosene, mostly used for cooking. Pertamina also found indications that people buy the subsidized kerosene and diesel fuel from gasoline stations to be sold to industries, which pay the market prices for the products.

"Pertamina has been overwhelmed in monitoring such practices," Ari said.

To overcome this, President Susilo Bambang Yudhoyono had instructed the firm to keep plowing more fuel into the market and tighten distribution supervision.

With global oil prices hovering at around US$65 per barrel, the government will have to spend over $10 billion for the fuel subsidy this year to keep the price of gasoline, diesel fuel and kerosene well below international market prices.

Apart from reselling practices, Pertamina also has to deal with the smuggling of subsidized fuel products to neighboring countries due to the wide price disparity.

Pertamina had recently fired dozens of officials for their alleged involvement in crude oil theft from the Lawe Lawe oil storage in East Kalimantan. However, many regard the dismissed officials as the company's "small fish".

Susilo had said earlier that the government would increase fuel prices in early October.

State Minister of National Development Planning Sri Mulyani Indrawati said on Wednesday that the government may increase fuel prices by at least 50 percent next month to cut the state budget deficit.

Bloomberg quoted Mulyani who said that after the probable 50 percent hike, prices would be raised gradually to cover costs within 36 months.

The government has argued that the fuel subsidy cut would be used directly and indirectly to assist low-income families. The government will disburse Rp 100,000 for each poor family eligible for the fund as registered by the Central Statistics Agency (BPS).

A total of Rp 4.8 trillion ($480 million) have been set aside for that purpose this year.