'Smuggling costs nation $600 million per year'

'Smuggling costs nation $600 million per year'

The Jakarta Post, Jakarta

Fuel smuggling, prompted by the government's fuel subsidy
policy, costs the government as much as US$600 million per year,
state oil and gas company Pertamina's president Baihaki Hakim
announced Monday.

The figures contradict recent allegations by Coordinating
Minister of the Economy Dorodjatun Kuntjoro-Jakti estimating that
losses from fuel smuggling are Rp 57 trillion (about US$5.4
billion) per year.

Baihaki said figures presented by Dorodjatun were based on
data provided by the Ministry of Fishery and Maritime Affairs
which had yet to be "clarified".

Baihaki said Pertamina calculated the estimate that ten
percent of the automotive diesel oil supplies -- the type of fuel
most smuggled -- has been illegally shipped out of the country.

Pertamina supplies 33 million kiloliters of automotive diesel
oil per year.

"Ten percent of 33 million kiloliters means 3.3 million
kiloliters, which cost about $600 million or Rp 6 trillion," he
told reporters during a ceremony to celebrate the state firm's
44th anniversary.

Baihaki said Pertamina would ask Dorodjatun to clarify its
statement.

He noted that figures were not the main issue but, rather the
fact that rampant fuel smuggling could cost the government
dearly.

"We'd better not argue about figures, as the government and
Pertamina have commissioned (state comptroller) BPKP and (state
auditing agency) Surveyor Indonesia," he said.

Fuel smuggling, which has been linked to the government's fuel
subsidy policy, leading to a gap in fuel prices on the domestic
market and overseas. Today, Pertamina sells fuel for industrial
customers at 50 percent of the international price, and even
cheaper to the public.

Some reports allege that Pertamina's officials, military
members and police officers were involved in the illegal trade,
making it difficult for the government to crack down.

The government has been trying to cut off the smuggling by
raising fuel prices gradually against the international price
level.