Pertamina pushes pesticide producer to buy fuel at market price

State oil and gas company Pertamina is seeking to sell kerosene at international price to local pesticide producers.

Head of Pertamina's supply and marketing office for Jakarta and West Java Tuty Anggraini said on Thursday that the company was now lobbying the Ministry of Industry and Trade to oblige local pesticide producers to buy kerosene on the domestic market at the international price.

Pertamina now sells fuel at discounted prices thanks to the government subsidy. The government provides the subsidy to help poor people, but some industries also reportedly benefit from the scheme.

For instance, according Pertamina's data, pesticide producer PT Bayer Indonesia buy a total of 1 million kiloliters of kerosene per month at the subsidized price of Rp 350 (US$1=Rp 8,875) per liter. Kerosene is one of the raw material for the making of pesticide.

Several analysts and legislators suspect that the company managed to buy kerosene at cheap price due to collusion with Pertamina's officials. They also suspect that some Pertamina officials deliberately provide extra supplies to Bayer.

But, Tuty dismissed the suspicion, saying Pertamina managed to persuade the company to buy its kerosene at the international price for two months in April and May this year.

But, the company later insisted to buy the kerosene at the subsidized price based on the decree issued by the director general of organic chemistry and agro-chemistry industries at the Ministry of Industry and Trade which allowed it to buy kerosene at the subsidized price.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Friday he had ordered Pertamina to fire any Pertamina officials who had been proved to have provided extra kerosene supplies to Bayer.

Pertamina's president Baihaki Hakim earlier said Pertamina was seeking to sell fuel at international price to several companies, especially export-oriented companies, including fishing and timber companies, to alleviate the government's subsidy burden.

He said Pertamina has asked the government to issue a decree to allow it to do so.

Pertamina's spokesman Ramli Djaafar said on Thursday that thus far has managed to persuade a number of companies to buy Pertamina's fuel at international prices

The companies are mining companies PT Newmont Nusa Tenggara, PT Newmont Minahasa Raya, Inco, Nusa Halmahera, Petrosea Timika, Freeport Indonesia; power companies Paiton Energy, Jawa Power and Makassar Power.

All the production-sharing contractors of Pertamina also buys fuel at the international prices, Ramli said. (godangl)