Pertamina to raise diesel fuel prices for mining companies

State oil and gas firm PT Pertamina will adjust the price of diesel fuel for mining companies equal to international price starting next month, compared to current price formula which is set at 75 percent of the market price.

?Mining companies and export-oriented companies will now have to follow the market mechanism,? Coordinating Minister for the Economy Aburizal Bakrie told reporters on Friday.

Bakrie earlier warned that the state budget deficit may swell to Rp39.8 trillion this year against a target of Rp20.3 trillion due to increased fuel subsidy spending amid high oil prices and increased fuel consumption.

Meanwhile, chairman of Indonesian Coal Mining Association Jeffrey Mulyono confirmed Friday about the Pertamina?s plans.

Jeffrey said Pertamina should properly inform the new policy to mining companies.

The hike in fuel prices will affect the production costs of the coal mining companies. It will add to the coal?s production cost around $1.5 to $2 per ton, he added.

?There is no reason for the mining companies to oppose the plans. However, in exchange, the government should consider not to impose export tax on coal,? Jeffrey told Petromindo.Com.

The government should also seriously to cut illegal mining activities and improve the uncertainty of regulations for coal producers, Jeffrey added without elaborating. (godang)