Indonesia to Import More High-Quality Fuel to Meet Shift in Demand

Bareksa • 19 Nov 2014

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Petugas mengisi bahan bakar minyak di salahsatu SPBU di Tanah Abang, Jakarta - (ANTARA FOTO/Wahyu Putro A)

There will still be deficit of around 1.7 million kilolitres.

Bareksa.com - Indonesia will increase imports of higher quality unsubsidised fuel by 600,000 barrels in December to help meet an expected quadrupling of demand after the government hiked prices for subsidised fuel, an energy official said on Tuesday.

Indonesian President Joko Widodo on Monday raised subsidised gasoline and diesel prices by more than 30 percent to help fund his reform agenda, a move expected to save the government up to 140 trillion rupiah ($11.5 billion) next year.

State energy firm Pertamina expects more consumers to migrate to using unsubsidised fuels after the price gap with lower quality subsidised fuels narrowed on Monday to below 2,000 rupiah per litre.

"We will add two to three cargoes of nonsubsidised fuel for December," Pertamina Marketing and Trading Director Hanung Budya told reporters, adding that one cargo is equal to 200,000 barrels.

Unsubsidised fuel demand is expected to increase to around 10,000 kilolitres per day within three months, from around 2,500 at present, Budya said. Pertamina has enough unsubsidised fuel stocks to last roughly five weeks, he said.

Former OPEC member Indonesia is the world's second-biggest importer of gasoline and diesel, according to the government. Ballooning energy spending has pushed Southeast Asia's largest economy into a trade deficit and hurt the rupiah.

Indonesia has about 1 million barrels per day of refining capacity, which meets about two-thirds of its demand. That means it must import more than 500,000 bpd of fuel products, both subsidised and unsubsidised, to fill the gap.

Indonesia's subsidised gasoline, sold as Premium, has a Research Octane Number (RON) of 88, and now sells for 8,500 rupiah per litre in Jakarta.

Unsubsidised gasoline, sold as Pertamax and Pertamax Plus or RON 92 and RON 95, sells for 10,200 rupiah and 11,600 per litre, respectively.

Budya also said Pertamina planned to reduce prices of unsubsidised fuel over the next one or two days to account for a 30 percent decline in crude prices since June.

Despite the price rises, Indonesia is expected to exceed its budgeted target for subsidised fuel consumption of 46 million kilolitres this year, Budya said.

"There will still be deficit of around 1.7 million kilolitres." (Source : Reuters)