Govt to cut profit margin for subsidized fuel sale next year
Association refuses to cooperate with foreign companies in fuel sales
Friday, July 13 2007 - 01:23 AM WIB
The government plans to reduce the profit margin for the sales of subsidized fuel-based oil for next year to 13.5 percent from 14.1 percent at present in order to further cut the fuel subsidy spending, Kontan reported Friday.
Director General of Oil and Gas at the Ministry of Energy and Mineral Resources Luluk Sumiarso said in Jakarta on Thursday that the government would cut the profit margin given to Pertamina, rather than to increase the prices, in order to cut fuel subsidy.
Based on the government's assumption in the 2008 state budget plan, the total fuel subsidy spending would decline to Rp 35.17 trillion. The subsidy estimate is based on the assumption of the crude oil price of between US$56 and $60 per barrel at exchange rate of Rp 9,300 per U.S. dollar.
The scenario is also based on the assumption the nation will consume 16.95 million kiloliters of subsidized Premium gasoline, 8.61 million kiloliters of subsidized kerosene, 11 million kiloliters of diesel and 728,700 tons of liquefied petroleum gas (LPG).
Meanwhile, Indonesian Committee for Energy Control (Kipper), a non-governmental organization, has insisted that the distribution and channeling of subsidized fuels should be conducted by state firms given that providing subsidized fuels is a strategic task and it is intended for the public at large
“In compliance with Law No. 21, 2001 on Oil and Gas, the distribution of subsidized fuels should be handled by the state, either through a state-owned or province-owned firm,” Kipper's Secretary General Sofyanto Zakaria was quoted as saying by Investor Daily as saying in Jakarta on Thursday.
He asserted that the downstream oil and gas regulator BPH Migas and House of Representatives’ Commission VII agreed in a hearing several days ago that both domestic and foreign private firms were not allowed to distribute subsidized fuels.
In a related development, the Jakarta chapter of Hiswana Migas, the Indonesian association of fuel station owners, said its members his party would refuse any request for cooperation with foreign companies in distributing subsidized fuel. “We don’t want to cooperate with foreign companies,” Haposan Siregar, the chairman of Jakarta's Hiswana Migas, was quoted by Investor as saying on Thursday.
The government has allowed all companies to distribute subsidized fuel in the country but only Pertamina can meet the tight requirements to do the business. BPH Migas is studying a mechanism to allow other companies aside from Pertamina to do the business. (*)