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Bloomberg: Indonesia May Lower Pertamina’s Fuel Distribution Fee Next Year

By Leony Aurora

May 7 (Bloomberg) — The Indonesian government may lower a fee given to state oil company PT Pertamina to distribute gasoline, kerosene and diesel in the country next year.

Pertamina receives a premium above the fuel prices in Singapore to cover transportation and distribution costs as well as a profit margin. The energy ministry has proposed that the premium be cut to 13.5 percent in 2008 from 14.1 percent this year, Luluk Sumiarso, director general of oil and gas at the ministry, said by telephone today.

Indonesia ended Pertamina’s monopoly in 2005 and opened the fuel retail market to foreign competitors including Royal Dutch Shell Plc and Malaysia’s Petroliam Nasional Bhd. The government appointed Pertamina as the sole distributor of subsidized fuel, which makes a bulk of the fuel sold in Southeast Asia’s biggest economy, because no other companies meet the requirement to have filling stations outside Java.

“We want Pertamina to be more efficient because this will cut our subsidies,” Sumiarso said. “All functions have to run” as normal, he said.

The decision on the premium will be taken when all parties, including Pertamina and the finance ministry, agree on this, Sumiarso said, without giving a time frame.

The government will subsidize prices for 17 million kiloliters of gasoline, 9.9 million kiloliters of kerosene, and 11 million kiloliters of diesel fuel this year. It has allocated 62 trillion rupiah ($7 billion) in the 2007 budget for subsidies to make fuel prices affordable.

To contact the reporter on this story: Leony Aurora in Jakarta at [email protected]

Last Updated: May 7, 2007 00:52 EDT

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