Pertamina urged to explain new fuel policy

Moch. N. Kurniawan, The Jakarta Post, Jakarta

The Indonesian Consumer Foundation (YLKI) lambasted both the government and the state-owned oil and gas firm Pertamina for not offering the public sufficient explanation about the new fuel price hike policy.

YLKI executive secretary Huzna Zahir said on Friday that the foundation was confused by the new fuel price policy.

"We're confused as to why the government or Pertamina set the fuel prices based on Singapore prices and how the system works," she told The Jakarta Post.

"It's another fact that the public is always being ignored, even in policy making that has such importance like fuel prices."

She urged Pertamina to give a clear and simple explanation about the new policy so as to minimize any negative impact on the public.

The government raised fuel prices by an average of 22 percent. But starting in March, local fuel prices, except kerosene for households, would be set monthly, based on prices in Singapore or the Mid-Oil Platts Singapore (MOPS) price.

The policy is necessary to help ease the burden of the state budget and help curb smuggling of fuel products out of the country.

Some economists and legislators also expressed their confusion about the new policy earlier, adding that they feared an inflationary impact.

Fear also exists that people will be tempted to hoard goods and fuel products with the expectation that fuel prices could rise again in March and the following months.

On the second day of the fuel price hike, Pertamina crude oil trade manager Nasrullah declined to give an explanation about the new policy, when asked by this newspaper.

He said that if the public would like to know more about the new pricing formula, they could find it at Platts' web site www.platts.com., or subscribe Platts' publications.

He added MOPS fuel price is the sum of brent price and operating margin of refinery in Singapore, which according to Pertamina's data, stood at US$2 per barrel.

Elsewhere, Huzna urged legislators to act quickly by summoning the government and Pertamina to provide a satisfactory explanation about the policy.

In November, the House of Representatives approved an average 30 percent increase in fuel prices for 2002, not a monthly price adjustment based on Singapore price level.

The House plans to summon the government officials to explain the matter next week.