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Downstream oil and gas regulator BPH Migas may allow
Dutch-based oil giant Shell and Malaysia's Petronas to join state-owned
oil and gas firm Pertamina in selling subsidized fuels.
BPH Migas representative Adhi Subagio Subono told The Jakarta Post on
Tuesday that the designation of Shell and Petronas as subsidized fuel
distributors, despite their lack of storage facilities, would benefit
consumers as the increased competition would force Pertamina, currently
the sole distributor of subsidized fuels, to provide better services
and reduce prices.
"New players could establish joint storage facilities, or if Pertamina
agreed, they could share Pertamina facilities to overcome their lack of
space," Adhi said.
Pertamina still holds the exclusive right to distribute subsidized
fuels, despite the partial liberalization of the country's retail fuel
market in 2005.
The government has said that the exclusive right continued to be
awarded to Pertamina as no other operators had been able to meet the
requirements, such as having sufficient distribution networks and
storage facilities.
As a result, the newcomers, including Shell and Petronas, have only
been able to sell non-subsidized high-octane gasoline in Indonesia.
BPH Migas has not decided whether to hold a tender or to resort to the
direct appointment mechanism to select the distributors of subsidized
fuels for next year.
As a result, the appointment of distributors, which should have been
announced in August, has been delayed.
A committee made up of BPH Migas, the Finance Ministry and the Energy
and Mineral Resources Ministry is still discussing a number of
contentious issues, which are reported to include policy changes so as
to allow more players to become involved in the distribution of
subsidized fuels.
Adhi said that the other mechanism being discussed involved a
competitive tender under which the winners would be selected based on
the price margin offered and the scope of their distribution areas.
Only those bidders that offered lower price margins and wider
distribution areas would be allowed to sell the subsidized fuels, he
added.
Pertamina marketing and trading director Ahmad Faisal said Tuesday that
his company had sent a letter to BPH Migas to express its readiness to
serve as the distributor of subsidized fuels next year.
Indonesia, with a population of some 220 million people, represents an
attractive market for gas retailers as motor vehicles account for
almost half of national fuel consumption, which currently stands at
some 60 million kiloliters per year.
A number of oil giants, such as U.S.-based Chevron and French oil firm
Total, have been lining up to enter the country's retail fuel market,
but are still waiting for the government's latest decision on
subsidized fuels, which account for 95 percent of Indonesia's fuel
market.
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