High World Oil Prices, Pertamina Keeps Fuel & LPG Stocks Sufficient

Jakarta, July 8, 2022 - Faced with a very high crude oil and product prices challenge, PT Pertamina (Persero) continues to maintain crude oil, fuel, and LPG supply at sufficient levels that can be controlled through a digital system.

President Director of PT Pertamina (Persero), Nicke Widyawati, explained that the severe increase in oil prices resulted in several countries experiencing an energy crisis. Therefore, Pertamina, as an energy SOE, made accurate plans by balancing aspects of national energy security and corporate conditions. According to her, Pertamina maintains supply nationally and per region to petrol stations because the stock required for each region is different for each type of product.

"We do not generalize the amount for all regions but adjust it because there are areas with high diesel fuel demand, some high Pertalite, and Pertamax. We are trying to look at this one by one with petrol station digitization," said Nicke.

With the increase in oil and gas prices, Nicke said that the tough challenge in the downstream sector is the products' economic prices are rising sharply. Compared to the economic price, the selling price of fuel and LPG set by the government is very low. As of July 2022, Solar CN-48 or Biosolar (B30) is sold at IDR 5,150 per liter, even though the economic price is IDR 18,150. Thus, for every liter of diesel, the government pays a subsidy of IDR 13 thousand.

Nicke continued that for Pertalite, the selling price is still IDR 7,650 per liter, while the current market price is IDR 17,200. Thus, for every liter of Pertalite paid by the public, the government subsidizes IDR 9,550 per liter. Likewise, for PSO LPG, where since 2007, there has been no increase, the price is still IDR 4,250 per kilogram, whereas the market price is IDR 15,698 per kg. Therefore, the subsidy from the government is IDR 11,448 per kilo. For Pertamax, Pertamina still set a price of IDR 12,500. Whereas for RON 92, competitors have set a price of around IDR 17 thousand. Because economically, the market price has reached IDR 17,950.

"We are still holding on to the price of 12,500 because we also understand that if we raise Pertamax this high, then a shift to Pertalite will occur, and of course, it will increase the burden on the state," said Nicke.

The post-pandemic economic recovery, Nicke added, has had an impact on increasing the public's mobility. Thus, the selling fuel and LPG trend also increase. If this trend continues, it is predicted that Pertalite and Solar will exceed the quota set by the government. Therefore, the government is revising Presidential Regulation No. 191 of 2014, specifically regarding the criteria for vehicles entitled to use subsidized fuel.

According to Nicke, Pertamina must maintain the subsidized fuel quota. Thus, it does not over-quota. Moreover, based on data from the Ministry of Finance, 40 percent of the poor and vulnerable to poor only consume 20 percent of fuel, but the top 60 percent consume 80 percent of subsidized fuel. Pertamina must ensure that subsidized fuel is used by eligible segments of society and vehicles that comply with regulations.

Following the Pertamina Roadmap, currently, it is the registration and data collection stage for those who are entitled. Therefore, starting July 1, 2022, Pertamina opens vehicle registration for those entitled to consume subsidized fuel. Registration can be done in three ways, namely the subsiditepat.mypertamina.id website, the MyPertamina application, and come directly to the petrol station. The next implementation will refer to the regulations issued by the government.

"Therefore, we also have to ensure the availability of non-subsidized fuel and LPG so that people who are not entitled to buy subsidized fuel and LPG can easily get non-subsidized fuel and LPG," concluded Nicke.**