Pertamina deficit presents new crisis

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Achmad Nur Hidayat MPP
Achmad Nur Hidayat MPP, Public Policy Expert and Chair of the Center for Political Economy Studies at UPN Veteran Jakarta.

Jakarta, IO – Our state energy company is at a crossroads. Its deficit is predicted to reach IDR 190 trillion throughout 2022 and the Government still has not paid off Pertamina’s 2021 deficit, which reached IDR 109 trillion. Pertamina’s debt to the Government will total a colossal IDR 299 trillion by December 2022. 

Minister of Finance Sri Mulyani Indrawati (SMI) admitted the negative cash flow of PT Pertamina (Persero) without the presence of Minister of SOEs Erick Thohir. Sri Mulyani explained that Pertamina’s deficit had reached US$ 12.98 billion, equivalent to IDR 190.8 trillion (exchange rate of Rp. 14,700 per US dollar) as of the end of this year, a victim of the sharp increase in the world price of crude oil. 

SMI detailed how the deficit was projected based on Pertamina’s cash flow, with a deficit of US$2.44 billion (or IDR 35.86 trillion) as of March 2022, as a result of a delay in raising fuel prices when global crude oil prices surged. 

Read: Sri Mulyani: Indonesia’s economy is facing four hurdles

Pertamina’s fiscal deficit has reached a profoundly worrying state, constantly bearing a negative carry (the vast difference between the retail selling price and the actual fuel price), dating from 2021. This is what gave rise to Pertamina’s current financial crisis. 

The Minister of SOEs, Commissioners and Directors of Pertamina has always dealt with the matter. News of such a horrific deficit could potentially harm his reputation, and even disrupt planned IPOs (Initial Public Offerings) for several other Pertamina subsidiaries.