Coal association protests Pertamina new pricing policy

The Indonesian Coal Mining Association (APBI) protested a new pricing policy of the state-owned oil and gas company Pertamina, forcing coal mining companies to purchase part of their fuel needs at international price or without any government subsidy.

APBI secretary general Jeffrey Mulyono said in a letter to Pertamina Balikpapan office, a copy of which was obtained by Petromindo.com, that the new pricing policy was against Presidential Decree No. 45/2001, which stipulates that the price of fuel products sold to domestic industries including coal should be set at 50 percent of international price.

Jeffrey, who is also president of Berau Coal, said that the new pricing policy would create new difficulties to local coal firms already facing a host of various other problems.

The Balikpapan office of Pertamina issued a letter on Oct. 12 asking coal mining companies in the Kalimantan region to purchase half of their coal needs at international price, while the remaining half at 50 percent of international price.

Pertamina other offices also issued a similar letter in their respective marketing areas to industries such as cement maker, paper, and LNG firms.

According to the Pertamina letter, the decision was made because the parliament had only approved the government to provide subsidy for some 54.6 million kilo liter of fuel products this year, compared to full-year domestic demand of 58 million kilo liter.

The quota for the Kalimantan region this year set is 4.75 million kilo liter, but the actual need is likely to reach 4.88 million kilo liter. This means that the extra demand must be paid at international price or without any government subsidy.

According to the new Pertamina policy, the price of automotive diesel product would be sold at Rp 2,000 per liter from Rp 1,000 per liter; industrial diesel at Rp 1,950 from Rp 975; and fuel oil at Rp 1,520 from Rp 760.(Alex/Godang)