Pertamina agrees to change price formula for fuel sales to PLN

The government has changed the ?Alpha? formula for the sales of the state-owned oil and gas company Pertamina's fuel to state electricity company PT Perusahaan Listrik Negara (PLN) to allow it to compete with private fuel distributors.

The "Alpha" comprises of distribution costs and margin.

?All parties (Pertamina, PLN and the government) have reached an agreement. This will be the government's position now,? Director General of Electricity and Energy Utilization at the Ministry of Energy and Mineral Resources said on Monday.

Under the new pricing formula, PLN will buy fuel from Pertamina at 6 percent above the Mean Oil of Platts Singapore (MOPS) price reference. At present, Pertamina sells its fuel to PLN at 9.5 percent above the MOPS price reference.

The new formula will be used for the sales of about 7 million kiloliters of fuel to PLN this year.

PLN has often called on Pertamina to change its pricing formula but the request was rejected by the latter. PLN then launched a tender to get cheaper price for the purchase of one million kiloliters of fuel. Shell, for example, won the tender to sell 850,000 kiloliters at only 3.75 percent above the MOPS price reference. (*)