Govt refuses to pay $300 million to Pertamina
Monday, September 27 2004 - 02:49 AM WIB
State-owned oil and gas company PT Pertamina has the potential to lose US$300 million, which it spent to buy fuel for domestic consumption through pre-finance processing deal (PPD), because the ministry of finance is not willing to reimburse the money, the Bisnis Indonesia newspaper reported in its Monday edition.
A source at Pertamina revealed to the Bisnis that Pertamina didn’t obtained permission from the ministry of finance to buy the fuel through PPD. That’s why the government didn’t want to release the money.
“Since the ministry of finance didn’t give permission to the application of PPD, Pertamina had submitted an apology letter and stopped the application of the PPD last month,” the source said in Jakarta last week.
However, according to the source, Pertamina is optimistic that the government would pay the nominal amount, $300 million. Moreover PPD didn’t harm the company in financial terms.
PPD is known as Deem Crude Processing Deal (Deem CPD) among the oil traders. Under this deal, fuel prices will be based on price of Iran Light Crude and it would protect the fuel price from the speculation of oil traders. (*)