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.