Pertamina wants higher distribution costs for 2009 subsidized fuel

State oil and gas company Pertamina which has been reappointed as the sole distributor of subsidized fuels for next year, has asked the government to increase distribution costs and profit margin, called ?alpha? from 8 percent to at least 12.5 percent.

With the 8 percent alpha, Pertamina would suffer a loss of at least Rp 2 trillion from the distribution of the subsidized fuels, Pertamina?s president Ari H. Soemarno said in Jakarta on Thursday.

?We (Pertamina) can break even only if the alpha is increased to 12.5 percent with the assumption that the crude oil price averages at $50 per dollar and the rupiah exchange rate at Rp 11,000 per dollar,? he said.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro acknowledged that with the fall in the crude oil prices, the 8 percent alpha looked no longer significant for the distribution of the subsidized fuels.

He said that the government would consider adjusting the alpha as required by Pertamina such as by using a sliding scale in determining the percentage of the alpha that had to be given to Pertamina.

With such a sliding scale, the alpha will be increased when the crude price falls and will be lowered if the crude price is higher than the agreed price ceiling. ?But the government needs to consult with the House of Representatives before making any adjustment,? he said. (*)