Pertamina denies reports of fuel distribution fraud

State owned oil and gas company Pertamina has denied the allegation that it had marked up the shipping costs to distribute subsidized fuel from the company's oil storage in Wayame, Maluku to Timika in Papua.

Petamina's spokesman Muhammad Harun said instead of marking up the shipping costs, Pertamina had managed to cut down the shipping cost between the two distribution points to below normal levels, Kompas reported on Tuesday.

Harun said in Jakarta on Monday that based on the study made by a team from the University of Indonesia, the fair cost of fuel shipment from Wayame to Timika was Rp 475 per liter.

"We have even managed to reduce the shipment cost to Rp 235 per liter in order to reduce the overall distribution spending," he was quoted as saying.

BPH Migas, the regulatory body for oil and gas downstream industry, earlier said that it had found irreglarities in the distribution of subsidized fuels from Pertamina's oil storage in Wayame, Maluku to Timika in Papua.

The agency estimated that the alleged fraud had caused a loss of about Rp 1.2 billion a month to the state.

According to BPH Migas, the cost for the transportation of fuel from Wayame to Timika paid by Pertamina reached Rp 500 per liter, much higher than the shipment rate between Biak to Nabire which was only Rp 200 per liter although the shipping distance was three times longer than that of Wayame to Timika.

According to information from the shipping industry, the rate between Wayame to Timika is only Rp 100 per liter . "As a result, the state has suffered potential losses of about Rp 1.2 billion per month," the agency's senior executive said. (*)