Govt to solve Pertamina?s cash flow problem

The government was concerned about the cashflow problem now confronting state oil and gas company PT Pertamina and would seek solutions to the problem, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Monday.

Purnomo told reporters in Palembang that the government would in the near future reimburse Pertamina Rp 4 trillion ($421 million) of fuel subsidies to help the firm overcome its cash flow problems.

This is to cover subsidies for the January-to-March period, he said.

The government currently owes Pertamina Rp 24 trillion in fuel subsidies, Purnomo added.

Pertamina imports petroleum products at market prices but sells them to end users at subsidized prices.

Earlier, a Pertamina official said the company had been facing cash flow problems, which could hurt its imports of oil products.

Pertamina's spokesman Abadi Purnama said several local banks had refused to issue new letters of credit to Pertamina to import oil products, because the firm had not yet paid back L/Cs worth more than Rp 9 trillion issued by the banks to finance the purchase of fuel for Pertamina.

"If this problem isn't resolved by May or June, it could hurt Pertamina's efforts to maintain fuel reserves enough to cover its (operational) needs for 22 days," Abadi said, citing that Saudi Arabian company Aramco had turned down orders from Pertamina. (Godang)