Pertamina proposes a higher margin from subsidized fuel distribution

State-owned oil and gas firm PT Pertamina is proposing a larger margin from the sale of subsidized fuel this year.

The company?s president director Karen Agustiawan said in Jakarta on Monday that based on the state budget assumptions of Indonesia Crude Price (ICP) at US$ 77 per barrel and the US dollar rate at Rp 9,200, Pertamina will reach breakeven in subsidized fuel distribution if it is given an Alpha of Rp 556 per liter. Alpha is term coined to refer the distribution costs and margin payable by the government for its service of distributing subsidized fuel.

?Since we?ve been asked by the government to have a profit of Rp 25 trillion this year, we hope we can get a margin of Rp 100 per liter. That means the Alpha should be Rp 656 per liter,? she said.

She also asked to review the Alpha every three months to check its sensitivity to the fluctuation of US dollar rate and ICP. ?At previous meetings we?ve asked to review the Alpha every three months,? she said.

According to her, Pertamina incurred a loss of Rp 6 trillion in subsidized fuel distribution last year, including some Rp 5.9 trillion in the first semester. ?In the first semester of last year, the Alpha was stipulated in terms of percentage, that is 8 percent of Mid Oild Platts of Singapore (MOPS). In the second semester, the Alpha was changed into Rp 536 per liter but the policy was not made retroactive,? she said. (godang)