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.