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Thursday, May 24, 2018

Pertamina to follow Shell in seeking fuel price hike

State-owned energy giant Pertamina willisoon propose to the government new prices for its commercially sold gasoline products amid an upward trend in global crude oil prices that have exceeded US$70 per barrel. As of Wednesday the price of global benchmark Brent crude was $77.91 perbarrel, up from price as little as $44.82 per barrel in June last year.

Nicke Widyawati

Pertamina acting president director Nicke Widyawati confirmed on Wednesday that the company would propose a new price for its gasoline. However, it is still in internal discussions.

“We will propose it, but currently our main focus is to serve society ahead of Ramadhan,” she brielly said, referring to the Islamic fasting month, which starts

Separately, Pertamina corporate secretary Syahrial Mukhtar said the firm was in consultations with the government regarding an increase in its gasoline prices.

“We are part of the government; [gasoline prices] are a sensitive issue for society. Therefore, the government must take into consideration the effect [of a fuel price hike] on people’s purchasing power,” She said.

Meanwhile, PT Shell Indonesia has submitted its request for a fuel price hike to the government. Djoko Siswanto, the oil and gas director general at the Energy and Mineral Resources Ministry, confirmed on Tuesday but he did not disclose the amount of price adjustment sought by Shell. He indicated the government would announce its decision within two weeks.

Shell Indonesia

When asked for confirmation on Tuesday Shell Indonesia president director Darwin Silalahi refused to comment. Shell Indonesia downstream external relations and country social performance manager Sri Wahyu Endah could not be reached for comment on Wednesday. As of April, the government required all gasoline distributors to get approval from the government before increasing fuel prices. 

The new policy was set out in the revised Energy and Mineral Resources Ministry Regulation (MinReg)No. 39/2014 on the formulation of gasoline retail prices. The regulation, issued last month, is aimed at keeping inflation in check. It binds all gasoline distributors in the country including privately-owned ones like newcomer Vivo Energi Indonesia, a subsidiary of Vitol Group based in Switzerland, and Total Oil Indonesia, the local arm of Frances Total SA.

In the previous regulation, gasoline prices fluctuated in accordance with global oil prices and the rupiah exchange rate, with the government limiting the profit margin of all business entities to a range of 5 to 10 percent of the basic gasoline prices. Djoko from the energy ministry explained further that the ministry had limited such requests for price increases to one a month.

“We will evaluate the proposal for at least two weeks and then announce the result. The standard is that [fuel distributors] cannot take a margin of more
than 10 percent,” he said, adding that the government would use the Mean of Platts Singapore (MOPS) benchmark.

Jakarta Post, Page-13, Thursday, May 17, 2018

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