Pertamina to import more fuel

Pertamina to import more fuel

Mochammad N. Kurniawan, The Jakarta Post, Jakarta

The state-owned oil and gas company Pertamina plans to import
some 1.9 million kiloliters of fuel during the next three months
in order to supply greater-than-expected domestic demand this
year, according to a company spokesman.

Adiatma Sardjito, however, said on Thursday that the plan had
yet to be approved by the House of Representatives.

"We have no other alternative. We must import the fuel,"
Adiatma Sardjito told the Jakarta Post, pointing out that
domestic refineries could not meet the demand.

He could not say where the imports would come from, but said
that Pertamina would hold a tender soon.

When the government and the House debated on the changes for
the current 2001 state budget, legislators insisted that
Pertamina must make its operation more efficient and only supply
52.7 million kiloliters of fuel to minimize the state budget
burden in financing fuel subsidies in addition to cracking down
on illegal fuel smuggling to neighboring countries.

Pertamina, and the ministry of mineral resources and energy
initially insisted upon a higher volume arguing that 52.7 million
kiloliters would not be enough to cover higher domestic demand,
but they backed down after legislators threatened to reject the
government fuel subsidy plan.

Adiatma said that domestic fuel consumption between January
and August alone had already reached 37.1 million kiloliters or
an average of 4.6 million kiloliters per month, higher than the
budgeted average of 4.4 million kiloliters per month.

Under the current 2001 state budget, spending for fuel
subsidies is set at Rp 53.7 trillion (US$ 5.6 billion), compared
to the total budget of more than Rp 340 trillion.

According to one estimate, by importing 1.9 million more
kiloliters, the government must allocate another Rp 2.5-2.9
trillion for fuel subsidies.

The House state budget committee is set to convene next week
to decide on the Pertamina proposal.

If the House rejects the proposal, government officials fear a
domestic fuel scarcity, which could trigger a new round of social
and political uncertainty.

Pertamina's downstream director Muchsin Bahar said earlier
that if the plan was approved, Pertamina would increase the
supply of premium gasoline by 261,100 liters, kerosene by 764,220
liters and diesel oil by 949,480 liters.