Despite the recent increase in the price of the 12 kilogram canister of liquefied petroleum gas (LPG), state oil and gas company PT Pertamina says that sales will still involve a major loss of about Rp 2.2 billion, a director said.
Last Saturday, the company increased the price of the 12-kg LPG by Rp 100 per kilogram, but Pertamina's director for marketing and trading Achmad Faisal said the increase would contribute little to cutting the size of the loss on the product.
"The increase may only reduce losses by Rp 100 billion as the gap between the current price and the market price is still too big," Faisal said Tuesday.
With the increase, the 12-kg LPG price increases from Rp 5,750 per kg, or Rp 69,000 per canister, to Rp 5,850 per kg or Rp 70,200 per canister.
Before the latest increase, Pertamina covered about 36 percent of the market price of one full 12-kilogram LPG cylinder.
Faisal said that Pertamina based the LPG market price calculation on the price from Saudi Aramco, referred to as "the contract price (CP) Aramco".
"The LPG CP Aramco currently is at US$500 per ton or about Rp 5,000 per kg. But, this is the price in Saudi Arabia. Here the LPG market price is at Rp 7,700 per kg," Faisal said.
Meanwhile, on Tuesday afternoon, Indonesia Corruption Watch (ICW) strongly criticized Pertamina for using the CP Aramco price as the basis for the LPG price calculation.
"It is no good to use CP Aramco to determine the LPG production cost price, because most LPG supplied in Indonesia comes from Pertamina and oil and gas contractors' refineries which have lower production cost than CP Aramco," ICW's head of data and analysis centre Firdaus Ilyas said.
"The production cost of LPG in the domestic refineries is only 75 percent of that of CP Aramco," he added.
Faisal said Pertamina used CP Aramco for the LPG price calculation basis because most of the LPG was bought from Saudi Aramco.
"Currently, imports are more than 50 percent of the total LPG," he said.
"We also use the CP Aramco cost price as the base for the price of the LPG produced in Pertamina's refineries, because the crude used to produce the LPG is bought at the market price," Faisal added.
In a hearing with lawmakers in May, Pertamina said that the total LPG supply this year would be 3,071,052 metric tons.
As much as 1,152,465 metric tons of this are from imports and the remaining 1,918,587 metric tons are from domestic refineries operated both by Pertamina and other oil and gas contractors.
Pertamina sells three types of LPG: the 3-kilogram LPG canister, the 12-kilogram one, and a 50-kilogram one.
The government only subsidizes the 3-kg LPG canister.
Pertamina has said this month's price increase may be the first one, with the company originally planning to raise the price every month by Rp 100 kg until they reached the market price.(bbs)
