Pertamina lifts subsidized fuel oil sale restriction

Pertamina lifts subsidized fuel oil sale restriction

Photo document of Pertamina gas station. (ANTARA/Indrianto Eko Suwarso)

In not more than three days, queues will no longer exist."
Jakarta (ANTARA News) - Subsidized fuel supplies are expected to return to normal, once state-owned oil and gas Pertamina lifts sale restrictions that are causing long queues at refilling stations in several regions in the past several days.

"We have lifted the sale restriction policy to normalize supplies and hope that long queues at refilling stations will end in the next three days at the latest," Hanung Budya, marketing and commercial director of Pertamina said, Wednesday.

Pertamina took the step after the government provided a guarantee to bear up to 30 percent of the cost above national need if consumption exceeded the subsidy quota, Hanung explained.

The government has set the subsidized fuel quota of 46 million kiloliters in the revised 2014 state budget. However, this quota is predicted to run out by the end of November or early in December 2014, prompting Pertamina to rearrange its distribution so that it will not finish until the end of the year.

This policy, however, caused a shortage of supplies, sparking panic buying and long queues at refilling stations over the past few days. "We hope the queues will return to normal in the next three days," Hanung added.

He said that the government, through Coordinating Minister, Chairul Tanjung, had assured Pertamina that it would bear 30 percent of the cost of consumed supplies over national need.

"However, Pertamina is required to carry out measured control over subsidized fuel consumption in the sense that there should be no excessive buying, let alone fuel being bought for resale outside the refilling stations," Hanung said.

The government had virtually set a subsidized fuel quota at 48 million kiloliters in 2014. However, the quota was reduced through a revised budget because it was considered to be too burdensome on the budget.

The Revised 2014 State Budget stipulated that subsidized fuel allocation should be reduced from 48 million kiloliters or about Rp300 trillion in the previous budget to 46 million kiloliters or Rp246.5 trillion.

But this quota, based on consumption calculation, is not adequate to meet increasing need for consumption and is expected to run out before the end of 2014. In order to maintain the quota, Pertamina, through the Downstream Oil and Gas Regulator (BPH) imposed sale volume restrictions.

BPH Migas issued a circular, July 24, 2014, regulating that beginning August, 2014, the sale of subsidized premium gasoline and diesel oil would be restricted.

Therefore, beginning early this month, Pertamina has restricted the sale of subsidized diesel oil and premium gasoline at certain hours and certain refilling stations.

Pertamina has banned the sale of subsidized diesel oil at fuel stations in Central Jakarta.

Diesel oil can only be purchased between 6.00 a.m. and 6.00 p.m. in certain regions. The time restriction applies to the regions or provinces that are prone to crime.

Pertamina has also banned the sale of premium gasoline at refilling stations on toll roads.

However, the Pertamina step sparked concerns from consumers and triggered panic buying in many refilling stations in a number of regions of the country in the past few days.

Meanwhile, a researcher has suggested that the government should take immediate steps to overcome subsidized fuel scarcity.

Fuel scarcity in a number of regions could no longer be prevented, Populis Institute researcher David K Alka said here, Wednesday.

It happened as a result of delay in the supply of subsidized fuel supplies and because of the government policy to stick to the consumption quota, he believed.

The scarcity was also related to the fact that consumption of subsidized fuel exceeded the quota that had been set in the revised 2014 state budget, he said.

The researcher also regretted that the government was not ready to anticipate fuel scarcity and failed to ensure adequate budgetary allocation for supplying subsidized fuels to the people.

The quota of subsidized fuel set at 46 million kiloliters for 2014 could not be raised because the Houses Budgetary Body and the government had already agreed, Finance Minister, Chatib Basri, said Wednesday in response to the problem. It was agreed upon when they discussed the revised budget.

"Additional subsidized fuel quota cannot be permitted because the law has been regulated like that. So, we have to stick to it," Chatib Basri said.

In the beginning, the government had asked for a space in the law on the Revised 2014 State Budget in case the consumption exceeded the 46 million kiloliter quota before the end of the year, but the Houses Budgetary Body had rejected it, Chatib reminded.

The finance minister asked the Ministry of Energy and Mineral Resources to maintain the quota allocation of 46 million kiloliters while taking anticipatory measures.

"Of course, Pertamina has a strategy on how to normalize the situation while maintaining the quota. It must have its own calculation," the minister said.

But according to Pertamina, it does not have too many choices, after the Rp300 trillion subsidy for about 48 million kiloliters of fuels in the previous budget was reduced to Rp246.5 trillion or 46 million kiloliters in the revised 2014 state budget.

Vice President for Corporate Communication of Pertamina, Ali Mundakir, explained that with the deduction of fuel quota, only two options will remain. The first option is to distribute subsidized fuels in a normal way, with the consequence that the stocks run out before the year end.

The other option is to arrange daily distribution, so that the subsidized fuel quota will not run out before the year-end (with the consequence of queues at refilling stations every day due to shortage of supplies.

Now that the government has guaranteed that it will bear the cost if consumption exceeds national needs, Pertamina has lifted its volume sale restriction and hopes to reduce the problem of long queues.

Earlier, Coordinating Minister for Economic Affairs, Chairul Tanjung, said in Dili, Timor Leste, Tuesday, that the government would guarantee the adequacy of supplies and vehicles wanting to refill should not necessarily snake down again at fuel stations.

"In not more than three days, queues will no longer exist," the chief economic minister said.

But it is not clear what steps the government will take and whether it will raise the price of subsidized fuels in saying it will bear the cost.

There has been a tug-of-war over the raising of prices of subsidized fuels. The debate is whether it will be the incumbent government which ends its tenure next October 20 or the government of the president-elect which will be inaugurated on the same date.

President-elect Joko Widodo said at the City Hall on Thursday he had made a request to President Yudhoyono in Bali to raise the fuel oil prices but Yudhoyono said it was not yet the correct time for raising fuel prices now.

Jokowi said he was determined to raise fuel prices after his inauguration next October.
(T.A014/S012/INE/KR-BSR/S012)

Comments