The Downstream Gil and Gas Regulatory Agency (BPH Migas) has proposed giving Pertamina Rp 1 trillion annually to ease the financial burden of the state-owned oil and gas firm in its quest to fully implement the one-fuel price policy Pertamina needs Rp 5 trillion (US$ 374,27 million) to sell subsidized Premium gasoline and Solar diesel fuel at Rp 6,450 per liter and Rp 5,150 per liter, respectively in 150 locations nationwide, including frontier, outermost and remote areas, known as the 3T regions. It has thus far covered only 22 locations, costing the firm Rp 300 billion in losses.
The agency’s contribution would come from its annual non-tax revenue (PNBP) totaling Rp 1.2 trillion, BPH Migas head M. Fanshurullah Asa recently said. The PNBP comes from companies transporting or selling fuel or natural gas as stipulated in Government Regulation No. 1/2006.
“Within the past live years, BPH Migas only used about Rp 200 billion of its total PNBP each year. Consequently, the remaining Rp 1 trillion was just recorded as additional state income,” Fanshurullah said. “So why don’t we use another Rp 1 trillion to help Pertamina develop the infrastructure needed for the one-price fuel policy?”
The proposed funds from the agency may help Pertamina to expand the coverage of the policy which aims to cut down on the price disparity of fuel between regions across the sprawling archipelago of more than 17,000 islands.
This year, it needs an estimated Rp 800 billion to support the policy adding to the burden of the energy giant, which last year struggled with financial woes caused by the government’s debt of Rp 22 billion from sales of subsidized 3-kilogram liquefied petroleum gas (LPG) canisters and subsidized Solar diesel as well as an additional Rp 8.4 trillion in debt from gasoline it supplied to the Indonesian Military (TNI) in 2014.
The government planned to repay its debt from the TNl’s gasoline consumption in the revised 2017 state budget, while the reimbursement for LPG and solar subsidies is outlined in the 2018 budget.
According to BPH Migas, the 150 locations targeted in the one fuel price policy cover 2,000 districts and 21,000 villages. The additional funds from the agency could be used to develop thousands of new sub-distributors in those locations, with each requiring an investment of between Rp 20 million and Rp 30 million, Fanshurullah said.
“Pertamina’s official gas stations will serve as hubs that supply fuel to sub-distributors there,” he said. The agency also expects the establishment of these sub-distributors to put illegal gasoline kiosks, locally known as “Pertamini,” out of business, particularly in 3T regions. These kiosks often sell fuel above regulated prices.
To support the plans, the regulator plans to set a maximum profit margin of Rp 500 per liter for all fuel distributors and subdistributors. At present, the profit margin in Premium gasoline sales at gas stations stands at Rp 270 per liter.
“These Pertamini kiosks have actually helped distribute gasoline to many regions out of Pertamina’s reach. However, they are illegal and operate without a proper license,” Fanshurullah explained.
“Therefore, the middle ground is to develop new sub-distributors that will operate under proper safety standards and regulated margins.”
Fanshurullah said he expected BPH Migas to realize its plan to transfer a large amount of its revenue to Pertamina next year after first discussing the matter with the Energy and Mineral Resources Ministry and the House of Representatives.
Pertamina president director Elia Massa Manik said he hoped the plan would materialize as soon as this year to help the firm reduce its mounting financial burdens.
“We are certainly pleased with an additional option to realize the one-price fuel policy One thing for sure is that we have committed to implementing it [the policy] in 150 locations by 2019,” Elia said.
Jakarta Post, Page-18, Monday, August 21, 2017
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