Pertamina told to secure distribution

Pertamina told to secure distribution

Rendi A. Witular and Leony Aurora, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono has instructed state oil and
gas firm PT Pertamina to keep ploughing more oil-based fuels onto
the market and to tighten distribution supervision amid fuel
shortages in some areas, a situation exacerbated by illegal
hoarding by errant distributors.

Some distributors preferred not to unload their supplies in
order to reap hefty profits ahead of the government's plan to
increase fuel prices early next month.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said on Wednesday that the instruction was made even though the
President was aware that such a move would further burden the
state budget.

"President Susilo wants the fuel shortage to be addressed
immediately by requesting me and Pertamina to boost supplies of
fuel, although he realized that it would increase the cost of the
fuel subsidy," he said.

The request was delivered during a teleconference between
Susilo and several of his ministers, including Purnomo, Minister
of Trade Mari Elka Pangestu, Minister of Health Siti Fadilah
Supari, Minister of Social Services Bachtiar Chamsyah and State
Secretary Yusril Ihza Mahendra at the Presidential Palace.

Currently on a six-day trip to the United States, Susilo has
been holding teleconference meetings with his ministers since
Monday.

Indonesia is set to spend over US$10 billion this year to keep
prices of gasoline, diesel and kerosene on the domestic market
below international market prices.

Purnomo said there was an indication that the supply shortage
was being driven by fuel hoarding by several distributors, in
addition to smuggling.

The country's fuel stocks are currently sufficient for 22.8
days, according to Purnomo.

To help address the shortage, the government would bypass fuel
distribution chains and sell the fuel directly to retailers.

Meanwhile, a government joint fuel monitoring team reported
its findings on illegal fuel trading, reportedly worth a total of
Rp 28 billion ($2.8 million).

In the investigation, conducted between July and September,
the team discovered eight industry sectors in Java and Kalimantan
that were using subsidized and smuggled fuel, instead of paying
market prices for the commodity, in a move estimated to have
caused the state nearly Rp 12 billion in losses.

"The illegal trading is caused by the big price gap between
subsidized fuel prices and market prices," said the team's
chairperson Slamet Singgih.

Industrial fuel users have to pay Rp 5,480 for a liter of
high-grade diesel, and Rp 5,490 a liter for kerosene, as compared
to the subsidized price of Rp 2,200 per liter for both types.

"We will coordinate with the Ministry of Industry, requesting
it to revoke business licenses of those involved in the theft,"
said Singgih.

The team found 14 gas stations across Java that had tampered
with their meters, out of the total 20 stations picked at random.
They also uncovered a diesel smuggling operation to neighboring
Timor Leste using a tanker vessel with a capacity to carry 1,000
kiloliters.

Fourteen illegal kerosene terminals were uncovered by the
team. "We have handed over the data to the police for further
action," said Singgih.

The fuel monitoring team was dissolved last year and
rejuvenated in April. It comprises 28 members, including
officials from the Oil and Gas Upstream Regulatory Agency,
Pertamina, the Navy, the National Police, the Air Force and the
Army.