Pertamina slammed for increasing LPG prices by 40 percent

The decision by state oil and gas company Pertamina to raise the sale price of l1quefied petroleum gas (LPG) by 40 percent starting Nov. 3 has drawn criticism and rejection from various quarters.

Pertamina has raised LGP sale price from Rp 1,500 per kilo - which has been in effect since 1998 - to Rp 2,100 a kilo. With the new increase, the people would now have to pay around Rp 25,500 to Rp 26,000 per tube of 10 kilogram LPG, from Rp 19,500 to Rp 20,000 before the increase.

Legislator Ahmad Farial of the House of Representatives' Commission VIII that deals with mining and energy demanded Pertamina to impose the increase gradually so that it would not burden customers too much.

"The 40 percent increase is very burdening. If the price must be increase, it must be pursued gradually. If Pertamina said that it suffered losses by selling LPG at the current price (of Rp 1,500 a kilo), it must do introspection," he said.

Farial said that Pertamina must be able to tell the public that the LPG price increase was imposed not because of inefficient operation. It must prove that it had been operating efficiently, without corruption or leakage.

"Thus, the people will believe that the price they have to pay is the real price, not because of the leakage that they have to bear," he noted.

The opposition also came from the Indonesian Consumers Foundation (YLKI). In a statement signed by YLKI's executive Indah Suksmaningsih, the consumer foundation said that it rejected the increase because it was imposed in the wrong time, namely ahead of the Ramadhan Muslim fasting month and the new year, when prices of most consumer products increase.

YLKI noted that Pertamina was still exercising its monopolistic power, and this was against the newly-passed anti-monopoly law, Law No. 5/1999.

Besides, Pertamina was not transparent in announcing the LPG price increase and had transgressed consumers' rights to get correct, clear and honest information, as required by Article 4 of the consumers protection law, Law No. 8/1999.

"Pertamina must be able to prove that the price increase was not the result of corruption practices," Indah Suksmaningsih said.

The director of oil and gas at the Ministry of Energy and Mineral Resources, Rachmat Sudibyo, said Pertamina must increase its LPG price in a bid to meet Pertamina's new mission as a profit-oriented company.

Rachmat said Pertamina had been suffering losses in its LPG business. And therefore, it must increase the sale price to reduce the losses or even to book profit from LPG business.

Nevertheless, Rachmat shared some quarters' suggestion that Pertamina must improve efficiency.

"We let Pertamina to decide the prices (of LPG and lubricants). Pertamina must do its own calculation on that because there is no subsidy from the government if Pertamina suffers losses from its LPG and lubricant businesses," Rachmat said. (*)