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18140
Fri, 09/05/2008 - 12:49
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https://www.oananews.org//node/18140
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News Focus: PERTAMINA EVENTUALLY SUCCUMBS TO GOVT'S REQUEST FOR A STOP IN RAISING GAS PRICES
By Eliswan Azly
Jakarta, Sept 5 (ANTARA) - In its function as regulator, despite also a producer of gas in Indonesia, state oil/gas company Pertamina can go ahead with implementing its program of a gas price hike without government intervention.
But in reality, this company eventually bogged down to the government's request for a stop in raising the price of gas on a monthly basis for the time being for social and humanitarian reasons.
Hanung Budya, Pertamina's marketing and commercial affairs deputy said on Wednesday the company had cancelled a plan to raise the price of liquefied petroleum gas (LPG) in 12-kg cylinders by Rp500 a kg each month.
"There are no more LPG price hikes," he said while appealing to the public not to worry about a rise in LPG prices particularly during the fasting month of Ramadhan.
Pertamina also assured that LPG stocks would be enough until the post-fasting month festivities, he said.
The plan to raise the price of LPG in 12-kg cylinders by Rp500 a kg each month has come under fire particularly after Pertamina last week raised it by 9.5 percent on August 25.
Earlier, Director General of Oil and Gas at the Ministry of Energy and Mineral Resources Evita Legowo said Pertamina had first to secure prior approval from the government to raise the LPG price.
In a special meeting at the presidential office on Wednesday to discuss the people's panic-stricken response to Pertamina's plan to increase the price of LPG every month until it reached its economical level, President Susilo Bambang Yudhoyono made the decision.
Pertamina was urged to stop increasing the price of LPG in 12 kg and 50 kg cylinders after having raised it by Rp500 per kg last month, State Enterprises Minister Sofyan Djalil was quoted as saying on Wednesday.
According to him, the timing to increase the LPG price by Pertamina was not right because it was done on the occasion of the fasting month while many prices of basic necessaries were already high.
"We guarantee there will be no further LPG price hikes until next year, until a further decision, and until the polls," the minister said.
If the world's oil price was stable, there would be no need to increase the LPG price further, the minister said.
To compensate for Pertamina's financial losses, the government would allow a decrease in the government's dividends in Pertamina, he said.
"However, it needs to be calculated first. How it will be calculated, I cannot explain it now," he said.
The government also asked Pertamina to guarantee optinal LPG supplies to the public.
In the meantime, Director of the Center for Public Policy Studies (Puskepi) Sofyan Zakaria said if the government wanted to ban Pertamina from raising the prices of LPG in 12-kg and 50 kg cylinders, it should subsidize LPG
"If LPG prices are still lower than the economical prices, the government must subsidize LPG," said Zakaria in his capacity as an observer.
Now that LPG is a non-subsidized fuel, Pertamina had the authority to set LPG prices itself, he said.
Pertamina raised the prices of LPG in 12-kg and 50-kg cylinders to avoid further losses on the ground that the current LPG prices were far lower than the economical prices, he said.
"The subsidy is important particularly when LPG prices are lower than the economical prices," he said.
Unless the government subsidized LPG, the decision to ban Pertamina from raising LPG prices could be regarded as an intervention, he said.
"This violates the law on state enterprises," he said, adding that if the government would reduce the amount of dividends Pertamina had to pay to the state, it could also be seen as an indirect subsidy in the form of lower dividends.
Another oil industry observer, Dr Kurtubi said that regular increase of LPG prices would make the government's plan on kerosene-to-gas conversion run into a snag.
Especially that the government wanted kerosene-to-gas conversion program to expand to other regions in West, Central and East Java provinces. "We have to give a thumbs up to Pertamina for its success in the implementation of the program in Jabodetabek covering Jakarta, Tangerang, Bogor, Bekasi and Depok.
Therefore, Pertamina's readiness to hear the government's call to stop increasing the price of LPG during the fasting month was seen as the best decision, because the state oil/gas company's target would not materialize if the social interest of the consumers was ignored, he said.
According to Kurtubi, if the past government was not trapped in oil/gas mismanagement, Indonesia could have reaped great profits from the current high world crude oil price and would not have plunged into the present difficult situation if it had managed its oil potentials well.
Indonesia`s failure to manage its oil assets properly in the past few years had caused its crude oil production to decline and led to its dependence on imported oil which had now placed the country in a difficult position.
Furthermore, Kurtubi said that as a result of improper management of the country`s oil potentials, the government was now facing difficulties in maintaining the state budget amidst the sky-rocketing crude prices in the world market.
Indonesia could have reaped huge profits from the world crude price hikes but mismanagement of our oil potentials has caused us to face difficulties, Kurtubi said
Jakarta, Sept 5 (ANTARA) - In its function as regulator, despite also a producer of gas in Indonesia, state oil/gas company Pertamina can go ahead with implementing its program of a gas price hike without government intervention.
But in reality, this company eventually bogged down to the government's request for a stop in raising the price of gas on a monthly basis for the time being for social and humanitarian reasons.
Hanung Budya, Pertamina's marketing and commercial affairs deputy said on Wednesday the company had cancelled a plan to raise the price of liquefied petroleum gas (LPG) in 12-kg cylinders by Rp500 a kg each month.
"There are no more LPG price hikes," he said while appealing to the public not to worry about a rise in LPG prices particularly during the fasting month of Ramadhan.
Pertamina also assured that LPG stocks would be enough until the post-fasting month festivities, he said.
The plan to raise the price of LPG in 12-kg cylinders by Rp500 a kg each month has come under fire particularly after Pertamina last week raised it by 9.5 percent on August 25.
Earlier, Director General of Oil and Gas at the Ministry of Energy and Mineral Resources Evita Legowo said Pertamina had first to secure prior approval from the government to raise the LPG price.
In a special meeting at the presidential office on Wednesday to discuss the people's panic-stricken response to Pertamina's plan to increase the price of LPG every month until it reached its economical level, President Susilo Bambang Yudhoyono made the decision.
Pertamina was urged to stop increasing the price of LPG in 12 kg and 50 kg cylinders after having raised it by Rp500 per kg last month, State Enterprises Minister Sofyan Djalil was quoted as saying on Wednesday.
According to him, the timing to increase the LPG price by Pertamina was not right because it was done on the occasion of the fasting month while many prices of basic necessaries were already high.
"We guarantee there will be no further LPG price hikes until next year, until a further decision, and until the polls," the minister said.
If the world's oil price was stable, there would be no need to increase the LPG price further, the minister said.
To compensate for Pertamina's financial losses, the government would allow a decrease in the government's dividends in Pertamina, he said.
"However, it needs to be calculated first. How it will be calculated, I cannot explain it now," he said.
The government also asked Pertamina to guarantee optinal LPG supplies to the public.
In the meantime, Director of the Center for Public Policy Studies (Puskepi) Sofyan Zakaria said if the government wanted to ban Pertamina from raising the prices of LPG in 12-kg and 50 kg cylinders, it should subsidize LPG
"If LPG prices are still lower than the economical prices, the government must subsidize LPG," said Zakaria in his capacity as an observer.
Now that LPG is a non-subsidized fuel, Pertamina had the authority to set LPG prices itself, he said.
Pertamina raised the prices of LPG in 12-kg and 50-kg cylinders to avoid further losses on the ground that the current LPG prices were far lower than the economical prices, he said.
"The subsidy is important particularly when LPG prices are lower than the economical prices," he said.
Unless the government subsidized LPG, the decision to ban Pertamina from raising LPG prices could be regarded as an intervention, he said.
"This violates the law on state enterprises," he said, adding that if the government would reduce the amount of dividends Pertamina had to pay to the state, it could also be seen as an indirect subsidy in the form of lower dividends.
Another oil industry observer, Dr Kurtubi said that regular increase of LPG prices would make the government's plan on kerosene-to-gas conversion run into a snag.
Especially that the government wanted kerosene-to-gas conversion program to expand to other regions in West, Central and East Java provinces. "We have to give a thumbs up to Pertamina for its success in the implementation of the program in Jabodetabek covering Jakarta, Tangerang, Bogor, Bekasi and Depok.
Therefore, Pertamina's readiness to hear the government's call to stop increasing the price of LPG during the fasting month was seen as the best decision, because the state oil/gas company's target would not materialize if the social interest of the consumers was ignored, he said.
According to Kurtubi, if the past government was not trapped in oil/gas mismanagement, Indonesia could have reaped great profits from the current high world crude oil price and would not have plunged into the present difficult situation if it had managed its oil potentials well.
Indonesia`s failure to manage its oil assets properly in the past few years had caused its crude oil production to decline and led to its dependence on imported oil which had now placed the country in a difficult position.
Furthermore, Kurtubi said that as a result of improper management of the country`s oil potentials, the government was now facing difficulties in maintaining the state budget amidst the sky-rocketing crude prices in the world market.
Indonesia could have reaped huge profits from the world crude price hikes but mismanagement of our oil potentials has caused us to face difficulties, Kurtubi said
