Pertamina asked to return government?s subsidy worth Rp 3.71 trillion

The Supreme Audit Agency (BPK) has urged stated owned oil and gas company Pertamina to return some Rp 3.71 trillion (US$=Rp9,000) of the funds channeled by the government to finance the subsidy for the sales of fuel in the domestic market in 2001 and 2002, Suara Pembaruan reported on Tuesday.

BPK said that the government?s subsidy funding was larger than it was supposed because Pertamina wrongly used the criterion of the basic cost for the fuel production that must be billed to the government.

According to BPK, the government should only pay a five percent fee for the processing of fuel at Pertamina?s refinery plants. But most of the cost components for the fuel processing activities had been heavily marked up causing a significant increase in the amount of the fuel subsidy that must be paid by the government.

In 2000, the amount of subsidy fund required by Pertamina for the procurement of crude oil and fuel product processing, for example, totaled Rp 70.30 trillion. The figure was then corrected by BPK to Rp 69.13 trillion due to alleged marked-ups. The same thing occurred in the procurement of imported crude oil and fuel products for January-June period. According to Pertamina?s calculation, the amount of funds for such purposes reached Rp 48.98 trillion but based on BPK?s audit, the spending was only Rp 47.28 trillion. (*)