Pertamina seeks government guarantee for fuel imports
Pertamina seeks government guarantee for fuel imports
Fitri Wulandari, Jakarta
State oil and gas firm PT Pertamina is requesting a government
guarantee to facilitate crucial fuel import plans as the company
faces cash flow problems.
Pertamina's finance director Alfred Rohimone said a government
guarantee would be needed in obtaining loans from banks to
finance fuel imports if the government fails to reimburse the
company for its share of the fuel subsidy.
"We have asked for a letter of guarantee from the government
so that we can approach a bank," Alfred told reporters on
Tuesday.
Without sufficient cash in hand, Alfred said, it would be
difficult to realize the fuel import plan.
Fuel imports are essential to avoid a shortage, a problem that
has occurred in several parts of the country and could create
serious social unrest and economic damage if not immediately
resolved.
On Monday, Pertamina said it would import between 10,000
kiloliters (kl) and 20,000 kl of premium gasoline and automotive
diesel oil to boost national fuel stockpiles to a safe level of
24 days of demand.
National fuel stockpiles stand at a total of 20.4 days of
demand. Premium gasoline and automotive diesel oil have the
lowest inventories of 14 days and 18.2 days respectively. Other
types of fuel do not need additional imports as stockpiles are at
a safe level.
The drop in fuel stockpiles has been partly related to
Pertamina's cash flow problem.
Until November 2005, Pertamina retains its monopoly in the
provision and distribution of oil-based fuel products, including
importing 20 percent of domestic needs for oil-based products.
The delay in the reimbursement of the fuel subsidy was
aggravated by soaring international oil prices, limiting the
company's ability to import fuel products.
The Ministry of Finance has recently agreed to reimburse up to
95 percent of fuel subsidy spending every month.
But Alfred said that the government had yet to reimburse some
Rp 12.9 trillion (US$1.43 billion) in subsidy spending undertaken
by Pertamina from January to June this year.
"The government was supposed to reimburse the fuel spending by
July 10, but we haven't received it," Alfred said.
Fuel inventories will further drop if Pertamina fails to
realize the import plan and may affect fuel provisions to regions
outside Java, Alfred said.
Director General of Financial Institutions at the Ministry of
Finance Darmin Nasution said on Monday that the government was
still discussing the matter with the company to find the best
solution.
Darmin said Pertamina still had debt to the government that
amounted to more than the monthly fuel subsidy spending.
Alfred argued that if the government reimbursed the fuel
spending accordingly, the company would have more money to repay
its debt.
"The fuel subsidy must be reimbursed every month to secure
Pertamina's cash flow. Then we would have enough money at the end
of the month to pay our debt," Alfred said.
As of June this year, Pertamina's debt to the government
stands at Rp 15 trillion. The company has yet to pay Rp 9.1
trillion of debt in 2003 to the government.