Pertamina agrees to provide additional diesel oil supply to PLN

State owned oil and gas company Pertamina has agreed to provide about 100,000 kiloliters of diesel oil to the state owned electricity company PLN to replace the gas supplies for the electricity company?s power plants in East Java, Bisnis Indonesia reported on Friday

?We are ready to provide about 10,000 kiloliters per month of diesel oil to PLN,? Pertamina's fuel division head Achmad Faisal said, adding that the additional diesel supply would be provided as part of the agreement signed by BP Migas, PLN, PGN and Pertamina recently.

Under the agreement, PGN will divert its gas supplies from PLN to other industries in East Java to cope with the acute shortage of gas supplies in the province. Many industries in East Java have stopped their activities due the lack of gas supplies from PGN.

Faisal said that PLN would buy the diesel oil at market price which now reached about Rp 5,700 per liter. According to him, PLN has asked to buy the diesel oil at Rp 850 per litter or equivalent to the price of gas it buys from PGN. But the request was turned down.

PLN?s director for power generation and prime energy Ali Herman, however, said that the state electricity company should receive compensation from the government for the gas supply diversion.

?We have proposed the government to provide subsidy for the oil purchase. The amount of the subsidy should be equivalent to the total amount of funds needed to purchase the diesel oil,? he added. (*)