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Widening fuel-price gap strains Pertamina as Indonesia determined to keep subsidies
State-owned oil-and-gas-giant Pertamina said the discrepancy between subsidized and market prices has become wider as global oil prices continue to climb, adding pressures to the already strained company.
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State-owned oil-and-gas-giant Pertamina requires customers to register their vehicle to continue using subsidized fuel. (Pertamina/Public Relation)
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tate-owned oil-and-gas-giant Pertamina said the discrepancy between subsidized and market prices has become wider as global-oil prices continue to climb, adding pressures to the already-strained company.
Pertamina CEO Nicke Widyawati said that the market prices for subsidized Pertalite gasoline and Solar diesel have doubled if not tripled from the prices set by the government.
She noted the actual prices for Pertalite and Solar amounted to Rp 17,200 (US$1.15) and Rp 18,150 per liter, leaving a gap of Rp 9,550 and Rp 13,000 per liter, respectively, as of July. Pertamina data in March showed the price gap for Solar was still Rp 7,800 per liter.
Subsidized liquified petroleum gas (LPG) 3 kilogram has also experienced a similar widened gap.
"The point is, we see economic prices [for fuel and gas] have increased sharply," Nicke told lawmakers during a hearing at the House of Representatives on Wednesday, adding that the widening price gap indicates how much the government would need to pay.
Read also: Pertamina records vehicle data to keep tabs on fuel purchases
International-oil prices have remained high over the past months and Pertamina estimates that the trend would persist until the end of this year, pointing to prolonged geopolitical tensions caused by the Russia-Ukraine war and global-energy-supply disruption that it has caused.
