Pertamina asks for higher ?alpha? rate for subsidized fuel sales

State-owned oil and gas company Pertamina has asked the government to increase the ?alpha? rate for the sales of subsidized fuels to 13.4 percent from 8 percent at present to prevent a possible loss caused by the fall in fuel prices, Kompas reported on Thursday.

Pertamina?s finance director Frederick Siahaan said in Jakarta on Wednesday that with the fall in fuel prices, the current alpha rate of eight percent had been too small to meet the distribution costs of the subsidized fuels.

?With the exchange rate assumption of Rp 11,000 per dollar and the price of the crude oil of US$45 per barrel, the alpha should be increased to at least 13.4 percent to enable Pertamina to reach a break event point in the sales of the subsidized fuels,? he said in a hearing with members of the Commission VII of the House of Representatives (DPR).

Pertamina has been reappointed to distribute the subsidized gasoline, diesel and kerosene this year. In selling the subsidized fuels, Pertamina is given an alpha? rate of 13.5 percent -- an amount that can be added into fuel retail prices for distribution costs and profit margin.

During the hearing, Evita Legowo, the director general of oil and gas at the Energy and Mineral Resources Ministry, said that the government was considering Pertamina?s request.

She said that the government might set a new alpha rate depending on the prevailing fuel prices. It means that the alpha rate will be regularly adjusted to the fuel price fluctuation.

This year, the volume of the subsidized fuels is estimated to reach 36.89 million kiloliters which include 19.4 million kiloliters of Premium gasoline, 11.60 kiloliters of diesel and 5.8 million kiloliters of kerosone. (*)