Indonesia's Pertamina May Adjust Higher-Grade Fuel Prices on April 1

PERTAMINA - JAKARTA. Indonesia's state energy company PT Pertamina is expected to adjust some fuel prices, a cabinet minister said on Wednesday, amid media reports of a planned hike for higher-octane fuels and high global prices due to the war in Ukraine.

Southeast Asia's largest economy has kept prices of its most widely used fuels unchanged so far, despite a spike in global oil prices, over concerns a hike could trigger a jump in inflation at a time when food prices are also rising.

Local media reported that Pertamina may raise the price of its octane 92 gasoline, known as Pertamax, which the energy ministry has said currently costs 14,526 rupiah ($1.01) per litre.

Pertamina's website said the Pertamax retail price for March was set at 9,000 rupiah to 9,400 rupiah per litre.

"Pertamax is not (subsidised), so if Pertamax price rises, well, I'm sorry," State-Owned Enterprises Minister Erick Thohir said in a virtual lecture.

"Wait for April 1," he added.

A Pertamina spokesperson did not respond to a request for comment.

Indonesia got rid of gasoline subsidies in 2015, but it has since continued to regulate retail prices for octane 88 and octane 90 fuels sold by Pertamina, designating it as a "special assignment" and paying compensation to the energy firm when it incurs losses whenever global oil prices rise.

Jakarta also subsidises diesel fuel, kerosene and LPG in small cylinders for household use.

However, throughout the pandemic, Pertamina has left unchanged prices of its most widely used fuels, including Pertamax, and only allowed price hikes for its most expensive fuels that cover 3% of total sales.

Satria Sambijantoro, an economist with brokerage Bahana Securities, said he expected Pertamina to limit the Pertamax price hike.

He said if the firm sets a big price gap between Pertamax and its subsidised brands, a shift in demand to cheaper fuels would likely occur and this could either cause government subsidies to balloon further or lead to fuel scarcity.

"We see Pertamax price-tag adjustments to 10,500 per litre as realistic," he said.