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The country could suffer Rp 1 trillion (US$111.1 million) in
losses this year due to smuggling and the diversion of subsidized
kerosene to unauthorized users, says the chairman of the country's
downstream oil and gas authority.
Downstream Oil and Gas Regulatory Agency (BPH Migas) chairman Tubagus
Haryono added that kerosene adulteration would be another major
contributing factor to the predicted losses of Rp 1 trillion.
A total of Rp 64 trillion from the national budget has been set aside
for fuel subsidies in 2007.
"As long as the disparities between subsidized and non-subsidized fuels
remain high, the illegal use of subsidized fuel by industry will
persist, causing huge losses to the state," Tubagus said Thursday as
quoted by Antara.
He said that many people were currently under investigation by the
authorities for adulterating subsidized kerosene with diesel. A
business engaging in such adulteration could cause the state losses of
up to Rp 300 million per day, he added.
The government has formed am interdepartmental team made up of
representatives of the Coordinating Ministry for Political, Legal and
Security Affairs, the Energy and Mineral Resources Ministry, the
National Police, the Home Ministry and the Attorney General's Office to
tackle the problem.
"We have asked the team to close the depots that serve as the starting
points for the diversion of subsidized fuel to unauthorized users,"
Tubagus explained
The price of subsidized fuel is on average Rp 2,000 lower per liter
than fuel sold at market prices.
The government has set a quota of 37.9 million kl for subsidized fuel
this year, which consists of 17 million kl of premium gasoline, 11
million kl of diesel and 9.9 million kl of kerosene.
However, Tubagus said the consumption of subsidized fuel was likely to
increase to 39.80 million kl in 2007 due to an expected increase in
consumption driven by higher economic growth.
The government subsidizes the sale of premium gasoline, kerosene and
diesel, which are mainly used by motorists, households and micro
businesses, respectively.
In late 2005, fuel prices were increased by 185 percent in the case of
kerosene, 104 percent in the case of diesel and 85 percent in the case
of premium gasoline, but smuggling remains widespread.
Endriartono Sutarto, the chief commissioner of state oil and gas
company Pertamina, has said he will focus on stopping fuel smuggling
and the illegal sale of subsidized fuel to industry.
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