Government re-studies price margin for PLN's fuels

The government is re-studying the right “alpha” fee for state-owned oil and gas company PT Pertamina in supplying fuel for state power company PT PLN.

 

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta Friday that the government would provide a number of alternatives such as by providing a 5 percent of “alpha” fee in fuel supply in Java and 9.5 percent for fuel supply outside Java or a flat 9.5 percent fee in all areas.

 

The fee, called "alpha", comprises of distribution cost and margin.

 

Earlier, the government and the House of Representatives (DPR) had agreed to give Pertamina a five percent alpha in distributing fuel to PLN, despite a five-year contract signed by both firms allowing Pertamina to get a 9.5 percent alpha.

 

Pertamina has already made it clear that it would not be able to provide fuels to PLN's all power plants in the country at the average price under the Mid Oil Platts Singapore (MOPS) with an alpha of 5 percent.

 

"If the price margin is fixed at five percent, PLN as the consequence should open a tender for the procurement of the company's fuel needs," Purnomo said.

 

Meanwhile Pertamina's deputy director for marketing Hanung Budya said that the state oil and gas company could accept the alpha of five percent if the fuel procurement is made only for a single area or destination.

 

"We can even accept an alpha of four percent, if the fuel procurement is made only for one point area and PLN itself to distribute to their power plant," he said. (godang)