Government plans to ease ruling on distribution of subsidized fuel

Ika Krismantari, The Jakarta Post, Jakarta

The government will ease requirements imposed on private fuel retailers to enable them to participate in the tender process for the distribution of subsidized fuels, an energy official said Thursday.

The chairman of downstream oil and gas regulator BPH Migas, Tubagus Haryono, said the agency was still drafting a new policy to give private fuel retailers a better chance of joining the tender process for the distribution of subsidized fuels.

Under the proposed policy, the regulator will divide distribution areas into at least five so bidders will no longer need to have extensive distribution networks to take part in the process.

Under existing regulations, the regulator has divided the country into four distribution areas -- area I, covering Sumatra; area II, covering Java and Bali; area III, covering Kalimantan, Sulawesi, Papua and Maluku; and area IV, covering West and East Nusa Tenggara. Distributors have to provide services in at least two different distribution areas.

Tubagus said many private retailers faced difficulties meeting the requirements as they had to build extensive distribution networks with significant fuel storage facilities to be able to qualify for the tender.

With no companies having met the requirements in recent years, the regulator has been continuing to appoint state-owned oil and gas company Pertamina as the primary distributor of subsidized fuels, despite the fact the country's retail fuel market was opened up in 2005.

On Thursday, witnessed by Energy and Mineral Resources Minister Purnomo Yusgiantoro, BPH Migas reappointed Pertamina as the sole distributor of subsidized fuels next year after rival retailers failed to meet the stated requirements.

Pertamina out-bided PT Aneka Kimia Raya, PT Sigma Rancang Perdana, PT Elnusa Petrofin, a local unit of Royal Dutch Shell, Malaysian state oil and gas firm Petroliam Nasional Berhad (Petronas), PT Total ERP Indonesia and PT Jasatama Petroindo, which has connections with British-based energy company BP.

Next year the regulator has assigned Pertamina to distribute 35.8 million kiloliters of subsidized fuels, including 16.95 million kiloliters of gasoline, 7.88 million kiloliters of kerosene and 11 million kiloliters of diesel.

BPH Migas said Pertamina would receive a margin of 13.5 percent for distributing subsidized fuels next year, lower than this year's margin of 14.1 percent.

Subsidized fuels currently account for about 95 percent of the country's total fuel sales.