Pertamina revises downward LPG price hike following SBY intervention
Tuesday, January 7 2014 - 01:40 AM WIB
The company said in a statement received Tuesday that starting January 7, the price of the non-subsidized LPG in 12-kg container will increase by an average of Rp 1,000 per kg.
Pertamina earlier increased the price of the fuel, which is mostly used for cooking by households, by Rp 3,959 per kg (depending on location). The move came following recommendation from the Supreme Audit Agency (BPK) as the company has suffered about Rp 7.7 trillion in financial losses from selling the LPG at prices lower than the economical price since 2011.
The company also argued that the price increase was necessary because of the sharp drop in the value of the rupiah against the US dollar (the country still rely on import for the fuel) and rising international price of LPG.
However, amid complaints from households over the steep price increase, and ahead of the 2014 general election, President SBY instructed related ministers to hold a meeting with Pertamina on Sunday to review the policy.
Pertamina said in the statement that with the drastically scaled down price hike, the new price of LPG in 12-kg container will range between Rp 89,000 to Rp 120,100 (depending on location), starting January 7, 2014.
It said that the lower price hike will cause Pertamina?s losses from selling the LPG by US$0.51 billion, or about Rp 5.4 trillion with exchange rate assumption of Rp 10,500 per US dollar.
As such, Pertamina is revising its 2014 work and budget plan, with net profit growth projection scaled down to 5.65 percent from original projection of 13.17 percent, the statement said.
Aside from the 12-kg container, Pertamina also sells LPG in 3-kg containers for poor household and small streetside businesses at lower price. Pertamina however does not suffer losses from the sale of the fuel in such type of container since it is subsidized by the government.
Editing by Reiner Simanjuntak