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View all search resultsFinance minister slams ‘lazy’ Pertamina over refinery development delays
The newly installed finance minister has taken the state-owned energy giant to task for failing to develop any new refineries in the seven years since it pledged to build seven such facilities, burdening the state budget and dragging the government's energy independence efforts.
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Pertamina’s refinery in Balikpapan, East Kalimantan, appears in this undated handout photo. (Courtesy of Pertamina)
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inance Minister Purbaya Yudhi Sadewa has criticized state-owned energy giant Pertamina for its delay in building new oil refineries, which he said was perpetuating dependency on imports and driving fuel subsidies to unsustainable levels.
Realized spending on all subsidies and compensation hit Rp 218 trillion (US$13.07 billion) as of Aug. 31, or 43.7 percent of this year’s budget ceiling of Rp 498.8 trillion. Energy subsidies and compensation accounted for Rp 176.5 trillion of that amount over the same period, or 44.8 percent of the full-year ceiling.
With demand continuing to outstrip domestic refining capacity, the massive government expenditure to keep fuel prices affordable shows no sign of abating, placing a long-term strain on the state budget and highlighting a critical vulnerability in the country’s energy security.
“The root of the problem is our heavy reliance on imports. We import a lot of [gasoline], diesel, up to tens of billions of dollars per year,” Purbaya told a meeting on Tuesday with House of Representatives Commission XI, which oversees finance and national development planning.
“How many years have we been experiencing this? It's been decades,” he added, urging lawmakers to pressure Pertamina to expedite the construction of new refineries.
Purbaya said Pertamina pledged in 2018 to build seven new refineries, a plan that was reportedly formulated when Chinese investors expressed interest in similar projects.
“The context at the time was that if investors built [refineries], Pertamina would have to buy [oil] from them for 30 years before taking over. Pertamina refused, saying they already had a plan to build seven new refineries themselves,” he said.
