JAKARTA: State-owned oil and gas company Pertamina has reported large losses from its fuel business after selling the popular Premium gasoline below the current market price.
Pertamina vice president for corporate communication Wianda Pusponegoro said the company would have to bear a Rp 15 trillion gap after selling fuel, particularly the Premium-brand gasoline, below its market value between January and August.
The figure was around Rp 2.5 trillion higher than the Rp 12.5 trillion gap reported at the end of July.
“At this moment, the market price is still higher than our Premium price of Rp 7,400 per liter,” Wianda said.
Pertamina currently sells Premium-branded gasoline at Rp 7,400 per liter in Java and Bali and at Rp 7,300 per liter in other areas. Meanwhile for subsidized diesel, the price is set at Rp 6,900 per liter.
The prices, as regulated by the government, have been in place since late March, although the market price has hovered between Rp 8,150 per liter in April and Rp 9,350 per liter in July.
Earlier this year, the government eliminated the subsidy for Premium-brand gasoline and overhauled the subsidy mechanism for diesel to a fixed Rp 1,000 per liter. The fuel prices now follow the fluctuations of the global price.
The policy ran well when the global oil price was under pressure. However, when the prices inched up in the early second quarter of the year, the government didn’t increase the price as part of an attempt to maintain the people’s purchasing power.
This forced Pertamina to carry the price gap, and no more reimbursement will be received by the company as the subsidy mechanism for Premium gasoline has been eliminated.
When the price started heading to a new low recently, the government also decided to maintain the price to balance the gap carried by Pertamina. A review on the price is expected to be carried out this October.
“We are expecting certainty from the government about the price so that we can decide on our next strategy,” Wianda said.
The benchmark West Texas Intermediate (WTI) crude price for November was at US$45.11 per barrel on Friday, according to figures from Bloomberg. Another benchmark Brent price for November settlement was at $48.2 per barrel. The prices are now less than a half of last year’s prices.
Energy and Mineral Resources Minister Sudirman Said confirmed the government had decided not to increase the fuel price amid declining global oil prices in an effort to offset Pertamina’s losses.
Sudirman added that the government had considered introducing an energy security fund that would be used to fill the gap in fuel prices in the future.
Under the plan, the fund will manage surplus money obtained when the government sets the fuel price higher than the market price. The surplus will be used to fill the gap when fuel is sold below its market price. Through the mechanism, a ceiling and bottom limit of the fuel price will be set.
Sudirman also acknowledged that imposing an excise on fuel was a potential source of funds to support the energy security fund.
“It is an option. However, we have to assess it first,” Sudirman said.
