JAKARTA: Finance Minister Purbaya Yudhi Sadewa has criticised state-owned energy giant Pertamina for its delay in building new oil refineries, which he says is perpetuating dependency on imports and driving fuel subsidies to unsustainable levels.
Realised spending on all subsidies and compensation hit 218 trillion rupiah as of Aug 31, or 43.7% of this year’s budget ceiling of 498.8 trillion rupiah.
Energy subsidies and compensation accounted for 176.5 trillion rupiah of that amount over the same period, or 44.8% 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 petrol, diesel, up to tens of billions of dollars per year,” Purbaya told a meeting with House of Representatives Commission XI, which oversees finance and national development planning.
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 Jakarta Post/ANN
