Pertamina to raise fuel prices for industry by 16%

Leony Aurora, The Jakarta Post, Jakarta

State oil and gas firm Pertamina will raise market fuel prices for industry for the October delivery by up to 16 percent as prices of refined products soar on concerns of supply shortages in the U.S. after the damage caused by hurricanes Katrina and Rita.

Premium gasoline in October will rise to above Rp 6,000 (about 60 U.S. cents) per liter from September's Rp 5,160 while diesel fuel will rise to above Rp 5,700 from Rp 5,350, Pertamina's head of fuel division Achmad Faisal said on Tuesday.

"I cannot announce the definite prices yet, as the board of directors has not signed the decision yet," he said in a phone interview. The new prices are likely to be applied this week, he added.

Kerosene for industry will be sold for at least Rp 6,200 per liter, fuel oil at Rp 3,500 a liter and diesel oil at Rp 5,500 per liter, said Faisal.

As of Oct. 1, the day the government raised retail fuel prices by an average of 126.6 percent, no quota will be set aside for industries, except for small enterprises and fishermen with boats weighing less than 30 gross weight tons. Such small-scale enterprises will get a monthly quota of subsidized fuel of eight kiloliters (kl) each.

Pertamina began applying in July market prices for oil, gas, mining and export-oriented industries, as well as entities that use more than 500 kl of fuel. It included more industries, including fishery companies, those located in bonded zones, independent power producers and entities that use more than 24 kl of fuel, in August.

Faisal further said that with the U.S. needing additional supply due to some refineries still being closed after the devastating hurricanes, fuel products prices might stay high next month.

"Even if the price of crude oil falls, the price of products will remain high," he said.

Pertamina is still looking for two cargoes of fuel products, amounting to some one million barrels, to secure supply this month.

Faisal said daily off-take in the days after the government announced the fuel price hike was lower than the usual 180,000 kl to 190,000 kl. On Sunday, the country consumed 67,000 kl and on Monday 120,000 kl.

"It's probably because people are still using the fuel they stored to anticipate the price hike," he said. "We will see what happens over the next two weeks to determine whether we'll need the two cargoes," he added.

Despite being an oil producer, Indonesia has to import 300,000 barrels of crude and 400,000 barrels of fuel products per day. Pertamina has long-term deals with several producers to supply some 60 percent of the fuel imports it needs every month.