Pertamina cuts Avtur prices

State oil and gas firm Pertamina has cut prices of aviation turbo fuel (Avtur) or airplane fuel both for domestic and international flights since January 1, 2001 following the declining crude oil prices in international market.

Aswindarto S., the head of the fuel storage division for industry, vessels and aviation at Pertamina's Domestic Storage and Marketing Directorate, said in a letter dated Dec. 29, 2000 that Avtur prices for domestic market, effective on January 1, 2001, would be cut by 14 percent to Rp 2,400 a litter from Rp 2,800.

Meanwhile, Avtur prices for international flight would be cut by 20 percent to US$0.26 a litter from $0.32.

Aviation expert Benny Rungkat said the cut in Avtur prices was sparked by the drop of crude prices in international market to a level around $25 a barrel now from over $30 a barrel in the second semester of last year.

"So, it's normal that Avtur prices drop because international prices also drop sharply," he said.

Benny noted that the cut in Avtur prices for domestic market was still too small, making domestic Avtur price 5 percent more expensive than that in Singapore.

He said Indonesia should have been able to sell fuel prices cheaper than those in Singapore because unlike Singapore, Indonesia was an oil producer.

Consequently, Benny said, almost all international airlines serving Indonesia chose to buy fuel in Singapore for their airplanes.

Benny Rungkat added that Avtur for domestic market could decline further if the rupiah strengthened against the U.S. dollar, as Avtur prices were closely related to the development of the rupiah's exchange rate against the dollar.

Meanwhile, according to an executive of an airline company, the cut in Avtur prices for domestic market would save his company Rp 200 million per airplane.

For an example, the company operates B737-200 airplane, that needed at least 8,000 liters of Avtur for one flight. If the airplane served two flights a day, it would consumed 16,000 litters of Avtur. (*)