At least 20% of subsidized fuel smuggled out of the country: Pertamina

At least 20 percent of heavily subsidized fuel products have been smuggled out of the country, and then reimported by state oil and gas firm PT Pertamina to cover shortages at home, according to one study revealed by Pertamina deputy director Mustika Saleh.

Mustika was quoted by the Kompas daily in its Friday edition as saying that the fuel smuggling had caused massive financial losses to the state.

The smuggling activities were carried by some businessmen and in cooperation with Pertamina's officials through certain ways. "Generally a smuggler received a delivery order from Pertamina at subsidized price. The fuel was then sold again to Pertamina at international price," said Mustika, a member of the newly promoted board of directors.

The government has recently announced the fuel subsidy for this year would jump to around Rp 63 trillion compared to the initial budget of Rp 14.5 trillion due to soaring international oil prices. Such a huge subsidy has created worries that it would eventually affect the budget capacity and impact the overall economy. Anlaysts have suggested the government to abandon the fuel subsidy policy as it was mainly enjoyed by rich car owners and also trigger smuggling activities. The government has decided to maintain to help maintain political stability amid the current general election period. (*)