...Equalised with Sovereign: PT Pertamina (Persero)'s ratings are equalised with those of its parent, the Republic of Indonesia (BBB-/Stable), reflecting close legal, operating and strategic linkages. Fitch Ratings believes that strong state support will continue due to Pertamina's role as one of the most important state-owned entities in executing Indonesia's national energy policy. Pertamina is the country's sole refiner and the dominant retailer of petroleum products. Public Service Obligation: Pertamina performs a government-directed public-service obligation (PSO) by selling certain refined products below market prices, and in turn is compensated via a government subsidy. The subsidies ensure the profitability of Pertamina allowing it to receive international benchmark prices and a predetermined margin on these products. Pertamina received subsidies of USD17.8bn in 2014, against EBITDA of USD6.1bn. Reduction in Subsidies: Fitch expects the subsidies Pertamina receives to fall substantially...
