Pertamina told to buy all oil produced by KKKS contractors

Jakarta (ANTARA News) - State energy company PT Pertamina has been asked to buy all oil production of contractors operating as production sharing contractors in the country to reduce the need for the company to import crude oil to feed its refineries.

The decision was made at a limited meeting headed by President Joko Widodo here on Tuesday.

The meeting, attended by Energy and Mineral Resources (ESDM) Minister Ignasius Jonan also produced a number of other decisions all directed toward reducing imports and save foreign exchange and at the same time to prop up weak rupiah.

Head of the Bureau of Communications, Public Information Service and Cooperation of the ESDM Ministry Agung Pribadi said the steps were to follow the directives given by the president to save and increase foreign exchange income in the energy and mineral resource sector.

The Ministry will soon facilitate the issuance of regulation to be effective soon, Agung said in a news release.

He said, President Jokowi also will sign a presidential regulation on the use of Biodiesel 20 (B20) to be effective on Sept 1.

The Presidential regulation will be effective on subsidized oil fuel (BBM) and non subsidized BBM.

Through the decision, the government could save US$2 billion this year; US$4 billion next year, Agung said.

The government also allows additional exports of 100 million tons of coal. The Minister already signed additional exports of 25 million tons of coal.

The additional exports will add US$1.5 billion to the foreign exchange earning, Agung said.

"With the decision to allow additional export of 100 million tons, a number of coal mining companies have submitted proposal for additional production of 25 million tons and approvals have been given. From the additional exports, the state could receive additional foreign exchange income of US$1.5 billion. The ESDM Minister has given the approval. It happens coal prices are good," he said.

Another important decision to reduce import and save foreign exchange, is the regulation to use a certain level of local content in upstream oil and gas projects and in power generating projects. The projects are required to use local components if they are available in the country.

Earlier, Finance Minister Sri Mulyani Indrawati said state electricity company PLN and Pertamina are the largest users of imported components among the state companies.

Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said power generating projects of state-owned power company PLN, would be rescheduled if they failed to meet the required level of local content (TKDN).

The limited meeting also discussed nozzle digitalization plan for subsidized Premium gasoline and automotive diesel oil.

"Real time nozzles would soon be produced to reduce possible misuse of BBM and to control consumption of Premium gasoline and diesel oil by the people," Agung said.

Earlier, the Ministry through the Oil and Gas Regulatory Body (BPH Migas) and PT Pertamina cooperated with state owned telecommunications company PT Telekomunikasi Indonesia in digitalization of nozzles in 5,518 gas filling stations (SPBU) all over Indonesia.

"With series of steps, the Ministry is expected to be able to contribute more to saving and increasing foreign exchange income to strengthen rupiah," Agung said.

The government has been under pressure of the rapid decline of the country`s foreign exchange reserves, trade deficit, widening current account deficit and falling value of rupiah.