Fuel Selling Price Continuously Reviewed

KOMPAS/ERWIN EDHI PRASETYA

The motorcycle riders queue to fill up fuel at the Manahan gas station, Solo, Central Java, Wednesday (12/18/2019).

JAKARTA, KOMPAS - The price of Brent crude oil had touched US$139 per barrel at the beginning of trading on Monday (7/3/2022), although it later fell to $125 per barrel. The spike in crude oil prices will further impact the selling price of fuel or BBM in Indonesia. State-owned PT Pertamina is currently reviewing the possibility of an increase in domestic non-subsidized fuel prices.

Also read:

Increase in Domestic Fuel Prices Inevitable

A lecturer at the Department of Economics and Business at the Vocational School of Gadjah Mada University, Yogyakarta, Fahmy Radi, said the increase in world crude oil prices would further impact domestic fuel prices. As a result, the increase in the price of fuel was difficult to avoid. If the price was not increased, the State Budget (APBN) would be under pressure because it must cover the discrepancy in the selling price of fuel or an allocation would be needed to pay compensation to Pertamina.

"However, increasing the price of fuel in a situation like this is not appropriate, because our society is still under pressure from the Covid-19 pandemic. Perhaps it is best [to contain fuel prices] until next year. If the price of crude oil still hovers above $100, the government can increase the price of Pertalite early next year," said Fahmy when contacted on Monday in Jakarta.

Not only Pertamina, but private companies in the fuel retail sector in Indonesia have also increased prices, such as Shell Indonesia.

Previously, Pertamina had twice raised the price of non-subsidized fuels, such as Pertamina Turbo, Pertamina Dex and Dexlite. The last two types of fuel are non-subsidized diesel. Not only Pertamina, but private companies in the fuel retail sector in Indonesia have also increased prices, such as Shell Indonesia.

Since Thursday (3/3), the price of Pertamax Turbo has increased from Rp 13,500 (94 US cents) per liter to Rp 14,500 per liter. Meanwhile, Pertamina Dex increased from Rp 13,200 to Rp 13,700 per liter. Dexlite increased from Rp 12,150 to Rp 12,950 per liter. The prices for Pertamax and Pertalite, two fuel types that are widely used by consumers, remain the same, at Rp 9,000 per liter and Rp 7,650 per liter, respectively, for the Java and Bali regions.

SUMBER: PERTAMINA

PT Pertamina operates manual dispensers at a number of gas stations in Palu City, Central Sulawesi, Wednesday (3/10/2018).

In line with Fahmy, the executive director of Energy Watch, Mamit Setiawan, added that raising the price of subsidized gasoline, Premium and subsidized diesel was a difficult choice for the government. This was because the country’s economic conditions, still under pressure from the pandemic, had meant people's purchasing power had not fully recovered. However, if the prices of the two types of subsidized fuel were not increased, the state budget would be squeezed.

"In the 2022 State Budget, the Indonesian Crude Price [ICP] is pegged at $63 per barrel, while the ICP throughout February 2022 reached $95.45 per barrel. The government needs to review the resilience of the 2022 state budget. If it is deemed incapable, the increase in fuel prices cannot be avoided," said Mamit.

Explore available options

Regarding the possibility of increasing the price of other non-subsidized fuels, Pertamina is still reviewing available options. According to acting corporate secretary of PT Pertamina Patra Niaga, a subsidiary of Pertamina in the retail fuel sector, Irto Ginting, his team was still monitoring developments in world crude oil prices. "The company is still reviewing the prices of all types of non-subsidized fuel," he said.

She explained that various factors determined the selling price of Shell fuel in Indonesia and price changes could not be attributed to a single factor.

Meanwhile, Shell Indonesia’s vice president of Corporate Relations, Susi Hutapea, said that her side understood the concerns about fuel prices. She explained that various factors determined the selling price of Shell fuel in Indonesia and price changes could not be attributed to a single factor.

“Other determining factors are the rupiah exchange rate, taxes, distribution costs and operating costs. Of course, we still refer to the regulations regarding the retail price of fuel in Indonesia," said Susi.

Chairman of House Commission VII, which oversees energy and natural mineral resources, from the NasDem Party, Sugeng Suparwoto, hoped that the government would immediately take a stance on the increase of crude oil prices. The portion of the consumption of Pertamax (RON 92) and Pertalite (RON 90) fuels in Indonesia is quite large and growing, shifting from the consumption of the Premium (RON 88), which is considered environmentally unfriendly.

“There are only two ways to respond to the current situation. If the government does not want to increase the price of Pertamax and Pertalite fuels, then the government must be willing to compensate Pertamina for the discrepancy in price. The government must immediately make a decision," said Sugeng. (MED/DIM)

(This article was translated by Kurniawan Siswo)