Pertamina ready for losses from selling fuel in remote areas

State owned oil and gas company PT Pertamina said it is ready to sell subsidized fuel in remote areas at low prices even if it will suffer losses from the operation.

The government provides subsidies for the sale of several types of fuel, such as Premium gasoline and diesel to make them affordable for the public. Despite the subsidies, however, people in remote areas continue buying the fuels at high prices due to the high transportation costs spent by Pertamina?s agents to deliver the fuels the area.

Premium gasoline and diesel are now sold at Rp 4,500 per liter in Jakarta and other cities around the country. In Papua, however, the price reaches between Rp 15,000 and Rp 20,000 per liter. Remote areas across the country consume a total of 700,000 kiloliters of subsidized fuels per year, according to Pertamina's data.

Airlangga Hartarto, the head of the House of Representatives? Commission VII in charge of energy affairs, said Wednesday that the House, in discussions about fuel subsidies with the government, has sought assurance from the government that people in remote areas will buy Premium and diesel at similar price as in urban areas

The government initially proposed that the amount of fuel subsidies be increased to also cover the costs of transporting the fuel to remote areas. But, since the government and the House failed to reach an agreement on the issue, Pertamina has finally proposed to cover the transportation costs by itself.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Pertamina would see its revenue reduced as a result of the measure.

Pertamina?s President Director Karen Agustiawan however said the firm was ready to ?absorb the losses?, citing that gains from upstream operation would offset the losses from the fuel sale in remote areas. (Godang)