Govt, House agree on profit margin of fuel from Pertamina to PLN

The government and House of Representatives (DPR) agreed to give state oil and gas company a five percent fee for the distribution of fuel to state owned electricity firm PT PLN, Antara news agency reported Thursday.

 

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

 

The agreement was reached in a hearing between the House budget committee and Minister of Finance Sri Mulyani in Jakarta Wednesday night.

 

Deputy chairman of the House budget committee Suharso Monoarfa said that the setting of alpha at only five percent will cause reduction in PLN`s fuel oil purchase cost. "PLN will become more efficient," he said.

 

He added that with the five percent alpha the subsidy to PLN in 2008 could be lowered to Rp 26.67 trillion from the Rp 27.84 trillion set in the government’s financial note.

 

Suharso said that actually the five percent alpha was already started in September 2007 as agreed to in a hearing between the House budget committee and the government in August 2007.

 

The figure is very small considering that in the January-September 2007 period, PLN was charged a 9.5 percent alpha. And even in 2006 the alpha was set at 14.1 pct.

 

Suharso added that during the hearing, the House's budget committee and the Minister of Finance agreed to allow PLN to hold its own tender if the alpha from Pertamina was higher than five percent.

 

"So, PLN is able to import fuel oil straight from abroad," he said.

 

In May 2007, Pertamina and PLN have signed a five year-fuel supply contract which would allow the latter to get fuel supply from Pertamina at cheaper prices. PLN would buy fuel from Pertamina at the average price under the Mid Oil Platts Singapore (MOPS) with a margin of 9.5 percent. (*)