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Surge in fuel demand during Ramadan may hurt Pertamina’s cash flow
The consumption of subsidized gasoline is expected to rise sharply ahead of and following Idul Fitri.
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A worker prepares to fill up a vehicle at a gas station in Jakarta. (Kompas.com/-)
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n increase in the use of Premium-branded gasoline during Ramadan and the Idul Fitri holidays in early June is expected to take a toll on the finances of state-owned oil and gas company Pertamina, as the fuel will be still sold below market prices.
Mamit Setiawan, the executive director of Energy Watch, said the sharp increase in consumption of the subsidized fuel would definitely hurt the cash flow of Pertamina, the main distributor of the low-octane gasoline.
“It will hurt Pertamina’s cash flow, as they have to shoulder the price gap. Hopefully the company can limit the loss by [increased sales of] nonsubsidized fuel, such as Pertamax and Pertalite,” he told The Jakarta Post on Monday.
Selling the subsidized fuel could hurt the cash flow of Pertamina, because it will take some time for the company to be reimbursed by the government.
Daily gasoline consumption during Idul Fitri is estimated at 107,165 kiloliters, or 15.78 percent higher than the average of 92,563 kl. That estimate applies to fuel consumption in the period of 15 days before and after Idul Fitri, which is expected to fall on June 5 this year.
According to Transportation Ministry data, 10.61 million private vehicles will be on the road this year for the annual exodus, which would be 13.09 percent more than last year’s 9.38 million vehicles.
Pertamina SVP retail marketing head Jumali said at a press conference on Monday that the expected sharp increase was partly based on the completion of toll roads, such as the 920-kilometer toll road from Merak to Probolinggo.
