Pertamina Loses Monopoly on Domestic Subsidized Oil Products

The Jakarta Globe

An Indonesian worker rides a bike past barrels of oil at a Pertamina depot. (Photo: Bagus Indahono, EPA)

Indonesia’s state oil firm Pertamina has lost its exclusive right to distribute subsidized oil products in 2010 after a unit of Malaysia’s Petronas and a local firm won supply tenders, a regulator said on Monday.

Petronas has won the right to distribute 20,440 kiloliters (128,547 barrels) of subsidized low-octane gasoline in the city of Medan, North Sumatra, next year, the head of Indonesia’s downstream oil regulator, BPH-MIGAS, said.

Indonesia’s PT Aneka Kimia Raya (AKR) Corporindo would also distribute 56,500 kiloliters (335,328 barrels) of subsidized diesel oil in Lampung province, in South Sumatra and in the cities of Banjarmasin and Pontianak in Kalimantan.

“By law, Petronas and PT AKR Corporindo are allowed to supply subsidized fuel. After we evaluated their capabilities in providing fuel, we selected them,” Tubagus Haryono, head of BPH-MIGAS, told reporters.

The remaining subsidized fuel would be supplied by Pertamina in 2010.

Overall, the government planned to supply of 21.4 million kiloliters (134.5 million barrels) of subsidised gasoline and 11.2 million kiloliter of subsidized diesel oil in 2010, Haryono said.

This year, Indonesia expects 19.44 million kiloliters of subsidized low-octane gasoline and 11.6 million kiloliter of diesel to be supplied.

BPH-MIGAS decides each year on the rights to supply and distribute subsidised oil products such as low-octane gasoline, kerosene and diesel.

Royal Dutch Shell Plc had also joined the tender to distribute fuel this year.

“The volume of subsidized gasoline and diesel is expected to be higher than the government’s 2009 plan, due to higher transportation consumption,” Haryono said without elaborating.

Separately, the director general of oil and gas at the energy ministry, Evita Legowo, said the government wanted the supply of subsidized fuel to be cut in the future.

The level of consumption of fuel is critical because it helps determine the scale of subsidies the government has to set aside in the budget.

Pertamina’s monopoly over all sectors of the oil market was ended in 2001, and three years later Indonesia opened up its domestic downstream oil business to foreign firms, paving the way for them to directly import fuel and sell to local customers.

But Pertamina had up until now retained the exclusive rights to supply subsidized oil products — which includes almost all products except for premium motor fuel — in the domestic market.

Reuters