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Indonesia Increases Diesel Fuel Price for Industry

Posted on: Wednesday, 13 July 2005, 09:01 CDT

Indonesia increases diesel fuel price for industry

JAKARTA, July 12 (Xinhua) -- Indonesia's state oil and gas firm PT Pertamina was reported Tuesday of having "quietly raised" the price of diesel fuel for mining and oil companies since July 1 to meet market prices.

Pertamina's fuel division head Achmad Faisal confirmed the hike, saying that mining companies and big firms -- those consuming more than 500 kiloliters of diesel fuel per month -- must pay according to market prices, said The Jakarta Post newspaper.

The formula to determine the price is 15 percent higher than the mid oil platts Singapore (MOPS), he said.

"At present, it stands at about 4,700 rupiah (48 US cents) (per liter)," he added.

Previously, all companies were charged 2,200 rupiah per liter for the subsidized diesel fuel.

Faisal said Pertamina had received a letter from the Ministry of Energy and Mineral Resources supporting this measure.

"The minister said it was unfair that export-oriented industries paid only 2,200 rupiah," he added.

He estimated that with such a measure, between 11 million kiloliters and 13 million kiloliters of diesel fuel would be procured without a government subsidy for the rest of the year.

Energy minister Purnomo Yusgiantoro supported Pertamina's move, saying the firm may raise prices as long as it is done according to prevailing regulations.

Article 3 of Presidential Regulation No. 22/2005 on fuel prices, issued on Feb. 28, stipulates that the price of diesel fuel used for purposes other than transportation stands at 2,200 per liter.

No article in the regulation specifies any circumstances under which a change in the price is allowed.

"It's up to the interpretation (of the regulation)," said Purnomo when asked about the diesel fuel prices. "If consumers agree to pay (higher prices), Pertamina can do so.

"(Pertamina) has to talk to the consumers first," he added.

Wahyudin Yudiana Ardiwinata, president director of PT Caltex Pacific Indonesia, which produces almost half of the country's oil output in Riau, said that Pertamina had not discussed any possibility of raising diesel fuel prices.

He also said that he had not received the circular about the fuel hike. "Perhaps it is still on the way," he said.

Yudiana said the hike would have more impact on contractors, to which the company outsourced transportation and parts of the operation, than on Caltex itself.

"Of course there will be effect, but we are committed to following the government's regulation," he added.

Source: Xinhua News Agency - CEIS

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