The Reason For Fuel Is Still Expensive, President Director Of Pertamina: High Production Costs

President Director of Pertamina, Nicke Widyawati. (Photo: Pertamina)

JAKARTA - President Director of PT Pertamina Nicke Widyawati explained the reasons behind the high cost of fuel oil (BBM) in Indonesia to Commission VII DPR RI

"One of the reasons is because production costs are still high due to the limited processing capacity of fuel refineries," said Nicke Widyawati as quoted by Antara, Monday, October 5.

Furthermore, at the Hearing Meeting (RDP) with Commission VII of the DPR, Nicke said Pertamina's crude oil processing capacity was only three percent of global supply.

With this ability presentation problem, it will also affect supply and demand or need and demand will ultimately affect downstream prices.

Pertamina has taken various steps to reduce the efficiency of fuel prices. Previously disclosed, PT Pertamina (Persero) would cooperate with Singapore in order to store fuel stocks at refineries owned by Indonesia.

"We will buy long-term fuel with Singapore, but we ask for the fuel stock to be stored in Indonesia," said Director of Logistics and Infrastructure of PT Pertamina Mulyono.

According to him, by keeping Singapore's fuel stock in Indonesia, it would count towards the national stock, even though it still belongs to Singapore.

"It is only stored in Indonesia, but later the cost will be paid by the supplier (Singapore)," said Mulyono.

He explained that the storage location is planned later in Tanjung Sekong. Even though it is only for safekeeping, it is included in a long-term purchase contract with Indonesia or a system called Supplier Held Stock (HSS).

The advantage of HSS Mulyono explained that it can increase the resilience of the national fuel stock because it is already in Indonesian waters. Second, it can reduce distribution and stock costs.

Third, there is no capex or capital investment at the beginning of the project. Furthermore, it reduces lead times during stock procurement and increases flexibility in stock use.

"Basically, so far, our fuel imports are still from Singapore, so we will establish cooperation which is certainly beneficial in terms of distribution efficiency," said Mulyono.