Pertamina to import more fuel to up reserves

Fitri Wulandari and Tony Hotland, Jakarta

State oil and gas firm PT Pertamina will import more gasoline and diesel fuel to gradually boost its fuel reserves to a safe level of 24-days supply to avoid shortages during the current election period.

Pertamina fuel division head Mukti Wibowo said national fuel supplies currently stood at 20.4 days.

"We will import an additional 10,000 kiloliters (KL) to 20,000 KL (per day) for gasoline and diesel fuel," Mukti told reporters on Monday.

Other types of fuel were in sufficient supply, Mukti said.

Gasoline reserves stand at 14 days of demand with daily consumption of 40,000 KL a day. There are 18.2 days of diesel fuel reserves with a daily consumption of 72,000 KL a day.

The company made the comments following reports of fuel shortages affecting several parts of the country.

Pertamina spokesman Hanung Budya Yukyanta said shortages in the regions were mainly due to technical problems such as transportation.

Hanung said with fuel reserves at around 20 days, shortages were likely when there were distribution problems such as bad weather or technical problems with the tankers.

"Reserves of 24 days will allow us to have more supplies when there are disruptions in fuel distribution," Hanung said, adding that it would take more than two months to increase the reserves to 24 days.

He added the company may buy the fuel from outside its traditional suppliers such as Singapore and the Middle East due to increasing demand in summer in the U.S. and Europe.

Fuel may be Imported from China, India and Africa, the company said.

Total consumption of oil-based fuel products is 170,000 KL a day of which between 130,000 to 140,000 KL is supplied by domestic refineries. Between 30,000 to 40,000 KL a day is imported.

Despite being the largest oil producer in Southeast Asia, the country's domestic refineries are only capable of supplying 80 percent of domestic consumption. There are nine refineries with a combined installed capacity of 1 million barrels a day.

Hanung also dismissed suspicion that the low reserves were caused by rampant fuel smuggling out of the country.

The low inventories exist because the company still faces cash-flow problems partly due to the government's failure to reimburse monthly fuel spending undertaken by the company, he explained.

The cash shortage affects the company's ability to import fuel products.

But the Ministry of Finance has recently agreed to reimburse between 90 percent and 95 percent of the fuel subsidy to Pertamina each month.

The delay in the reimbursement of the subsidy had been aggravated by the soaring international oil price.

"The plan to import additional fuel will depend on the availability of financing," Hanung said.

He said the government had promised to pay Rp 12 trillion and Rp 14 trillion for June and July fuel spending respectively.

Meanwhile, director general of financial institutions at the Ministry of Finance Darmin Nasution said that Pertamina should not put the blame on the government for its financial woes.

"Even if the government manages to pay according to the new mechanism (monthly disbursement), no one can guarantee that Pertamina's cash problem will be resolved because its debt to the government is bigger than the monthly oil subsidy," he said.