The Downstream Oil and Gas Regulatory Agency (BPH Migas) has decided to scrap its plan to give Rp 1 trillion (US$73.9 million) to Pertamina annually from its annual nontax revenue (PNBP) to ease the company’s financial burden in its quest to fully implement the one-fuel price policy The proposed fund could have helped Pertamina to expand the coverage of the policy, which aims to cut the price disparity of fuel between regions across the sprawling archipelago of more than 17,000 islands.
“It was just a thought that BPH Migas head [Fanshurullah Asa] had at that time,” said Harya Adityawarman, Energy and Mineral Resources Ministry’s director for down stream business, on the sidelines of a press conference on Friday.
“Some people said that Pertamina had losses caused by the one-fuel price policy and Pak Asa thought that we could [give Pertamina] some Rp 1 trillion from the country’s non-tax revenue,” he said. “But in the end, there were procedures [that Pertamina had to fulfill].”
However, Harya said Energy and Mineral Resources Minister Ignasius Jonan had promised to hold a meeting with Pertamina to discuss the proper incentives to ease its burden, although he declined to provide further details. He strugged off concerns about Pertamina’s possible losses that could 'comefrom the policy.
“This is not about a matter of loss or profit, but about social justice.” Pertamina needs Rp 5 trillion 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 by 2019, including frontier, outermost and remote areas, known as the 3T regions. It has thus far covered only 26 locations as of November, costing the firm Rp 300 billion in losses.
Pertamina president director Elia Massa Manik had said the company might face a possible $ 1 billion revenue decline annually if the government was to proceedwith its one-fuel price policy until the end of President Joko “Jokowi” Widodo’s term in 2019.
“The government could have taken [the one-fuel price adjustment cost] from, for instance, our dividends,” Elia said recently, pointing out that Pertamina had paid Rp 12 trillion in dividends to the government last year.
“Therefore, even though we could not yet increase the fuel prices, we would not feel as though our revenues were taken away.”
Pertamina’s struggle to maintain the one-fuel policy price has been exacerbated by the government’s decision to ignore the rising global oil prices in the past months.
This has led to the company booking a 29.7 percent net income decline until the third quarter of 2017 to $1.99 billion because of a 27 percentincrease in its cost of sold goods and operating expenses.
‘As Mr. Elia has said, our fuel price formula still refers to the one issued by the Energy and Mineral Resources Ministry” said Pertamina finance director Arief Budiman.
“The formula is reiterated every quarter but it is subject to change next year. Therefore, we expect fuel pricerises for 2018.” BPH Migas, appointed by Jokowi to supervise the implementation of the one-price fuel policy remained convinced that it would fulfill the target of 54 new fuel stations this year as mandated by the program as it invited more private companies to participate.
Listed chemicals and petroleum distributor PT AKR Corporindo is the only private company to join in the program with a target of opening five fuel stations this year.
Private firm PT Vivo Energy Indonesia, which recently kicked off the operation of its first fuel station in Cilangkap, East Jakarta, is among the interested parties as it is mulling building a distribution line in Maluku, said Ibnu Fajar, a member of BPH Migas’ fuel committee.
“The more players we see in this policy the better it will be,” he told reporters on Friday.
The Jakarta Post, Page-13, Saturday, Nov 4, 2017
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