Baihaki says international syndicate involved in fuel smuggling

President of state oil and gas firm Baihaki Hakim said on Tuesday that the rampant fuel smuggling out of Indonesia was well organized involving international syndicate.

Baihaki was quoted in Tokyo by Kompas daily as saying that curbing the fuel smuggling could not be done by just catching the petty smugglers but must arrest the mastermind.

"Resolving the fuel smuggling problem is not easy because it is done by international syndicate with strong financial backup, tanker and other facilities," he said.

Minister of Mines and Energy Susilo Bambang Yudhoyono made an impromptu visit to the Cilincing Port in North Jakarta on Monday, founding four barges not listed at Pertamina but loaded with kerosene.

Susilo confirmed on Monday press reports of fuel smuggling out of the country.

Baihaki said that most of the fuel products particularly diesel fuel was being smuggled to China and Thailand.

He said that the fuel smuggling was made possible particularly because of cheaper domestic fuel prices due to government subsidy.

He added that the supply of abundant diesel certain "institutions" which could not be controlled by Pertamina was also another factor. He declined to name the institutions.

He said that in a bid to help curb the fuel smuggling, Pertamina was increasing coordination effort with the National Police and the Armed Forces.

Separately, Pertamina senior official Harry Poernomo said that the state oil and gas company would lessen fuel delivery to agents to help prevent fuel smuggling.

He said that there's an indication that the fuel smuggling occurred because the agents received abundant supply of fuel.

He said that if this measure didn't help, Pertamina might drop the agents all together and distribute the fuel by itself. (*)