The profit of state-owned oil and gas holding company Pertamina has reportedly dropped to less than Rp 5 trillion (US$335 million) in the first half of 2018 from Rp 18.73 trillion in the same period last year.

State-Owned Enterprises Ministry mining, strategic industries and media undersecretary Fajar Harry Samporno blamed the global oil price increase for the sharp decline of the oil and gas giant’s profit.

“[Pertamina’s profit] amounts to less than Rp 5 trillion in the first half. It is still far [from the full-year target],” Fajar said on Thursday, as quoted by kontan.coi.id., adding that it was not yet the final figure.

For this year, the government has set a target for Pertamina to generate Rp 32 trillion in profit, as the company collected Rp 34 trillion in profit in 2017 and Rp 41.87 trillion in 2016.

Fajar said revenue from the company’s upstream business was not enough to compensate for the losses in downstream.

He did not divulge any details but was likely alluding to the government policy requiring Pertamina to shoulder the cost of subsidized fuel prices through the public service obligation (PSO), because the government has decided not to increase the price of fuel until at least 2019 in a move deemed populist by critics.

Pertamina also needs to implement a program requiring fuel to be sold at similar prices throughout the archipelago.

Fajar said he was unable to project the annual profit of the company, because it also depended on the global oil price and rupiah exchange rate. (bbn)