State suffers Rp 7.63 t from subsidy miscalculation

The Jakarta Post | Wed, 09/03/2008 7:36 PM | Business

BPK chief Anwar Nasution on Wednesday said Pertamina had beenusing a pricing formula that was not in line with the 2005presidential regulation on oil price benchmarks.

The regulation states that the price of subsidized goods (JBT)has to be based on the average price of the commodity a monthbefore a new purchase is made.

"The problem arose when Pertamina interpreted "a month before"to mean a month before claiming payment (to the government)"Anwar told lawmakers in the first hearing of a Houseinvestigation into oil subsidies.

The House ran the investigation based on a series ofinefficiencies in the management of the country's oil and gassupply, particularly the process of importing oil for domesticconsumption, cost recovery mechanism implementation, and in oiland gas purchasing contracts.

The misinterpretation, he said, led to the state to pay morefor oil subsidies.

Anwar said the excess reached Rp 1.08 trillion in 2006 and Rp6.55 trillion in 2007.

The agency discovered there had been a failure in the volumeof other subsidized goods distributed by Pertamina. Excesses inthe distribution amounted to Rp 88.65 billion in 2006 and Rp48.94 billion last year.

Anwar said the oil distribution failure might involve criminalconduct and the agency had issued a letter to alert the NationalPolice. The police responded to the letter by exposing itsfindings on Aug. 26.

"The distribution of diesel JBT, with a total amount of 6.25million liters, used a bunker ship operating with a fake permit,"he said.(and)