Government Asked To Pay Compensation For Sales Of Pertamina's BBM And LPG Worth Rp324.5 Trillion

Illustration. (Photo: Doc. Antara)

JAKARTA - The government is asked to immediately provide certainty in the payment of compensation for the sale of fuel oil (BBM) and LPG gas to PT Pertamina (Persero) which is estimated to reach Rp324.5 trillion this year.

"What month should the compensation be paid, so if it hasn't been disbursed, how long will it take. From the side of the old audit or disbursement, everything should be transparent. For the five months of 2022 alone, it has reached Rp. 100 trillion," said Abra PG Talattov, a researcher at the Institute for Development of Economics and Finance (Indef), quoted from Antara, Friday, May 20.

The provision of compensation to Pertamina is a consequence of the provision of subsidies for diesel fuel and 3 kg LPG as well as the government's decision to stipulate Pertalite as a Special Assignment Fuel Type (JBBKP) in March 2022 which is retroactive. Pertamina provides Pertalite at market prices but is sold at Rp 7,650 per liter.

"Therefore, the difference is a compensation that the government must cover," Abra said in a written statement.

According to him, the government's delay in paying the compensation debt will affect Pertamina's reputation in seeking investors when issuing bonds. Therefore, the government was asked to think about it. If the credit rating drops because the government is late in paying debts, Pertamina will be subject to additional interest costs.

"There is inefficiency in the issuance of bonds, there is an additional cost of fund due to delays in payment of receivables by the government," he said.

Finance Minister Sri Mulyani Indrawati previously admitted that the economic price of Pertalite, diesel, kerosene, and LPG was far above the assumed price of the Indonesia Crude Price (ICP) which was set at 63 US dollars per barrel. Currently, the economic price has increased sharply in line with the ICP which is perched above 100 US dollars per barrel. Thus, the economic price of kerosene changed to Rp. 10,198 per liter, diesel to Rp. 12,119 per liter, LPG gas to Rp. 19,579 per kilogram, and Pertalite to Rp. 12,665 per liter.

According to Sri Mulyani, with this change, Pertamina's cash flow since the beginning of this year has become negative because it has to bear the difference between the retail selling price and the economic price with an ICP price of above 100 US dollars per barrel.

"Of course if he (Pertamina) has to import fuel, he (Pertamina) also pays it in dollars. This has caused Pertamina's financial condition to decline," Sri Mulyani said during a working meeting with the DPR's Budget Agency, Thursday 19 May.

Currently, the government is proposing a basic macroeconomic assumption, namely a change in ICP from 63 US dollars per barrel to the range of 95 US dollars per barrel, then to 105 US dollars per barrel. Due to the increase in the ICP projection in the 2022 APBN, the government proposed an additional energy subsidy of Rp. 74.9 trillion, of which Rp. 71.8 trillion was for fuel and LPG. The compensation for fuel and LPG is estimated at Rp324.5 trillion.

Abra Talattov agrees with Minister Sri Mulyani's policy to increase the subsidy budget for Pertamina because this BUMN is not given the freedom to adjust prices, on the other hand, the selling price is far below the economy.

Even though the government has received the green light for additional subsidies, Abra continued, it should not be forgotten that the government's target is to change the subsidy mechanism to a closed subsidy. This subsidy policy for commodities cannot be ignored. The current addition of subsidies is only because Indonesia gets windflow from taxes, so from a fiscal budget perspective it is possible.

"But if it is left unchecked, for example, the APBN will not be able to cover subsidies, so it will be a ticking time bomb. The government cannot be complacent, having to speed up energy subsidy reform. So later, additional compensation subsidies can be suppressed," he said.