Pertamina readiness doubted

JAKARTA: State Oil Enterprise PT Pertamina (Ltd) is potential to lose competition with foreign companies if Pertamina doesn't improve its nozzle for non-subsidized fuel. A member of the House Commission VII Satya W. Yudha argued the fuel consumption
Wandrik Panca Adiguna
Wandrik Panca Adiguna - 06 Desember 2010  |  01:44 WIB

JAKARTA: State Oil Enterprise PT Pertamina (Ltd) is potential to lose competition with foreign companies if Pertamina doesn't improve its nozzle for non-subsidized fuel. A member of the House Commission VII Satya W. Yudha argued the fuel consumption restriction policy next year would create opportunities for local companies to capture the market of consumers switching to non-subsidized fuel. PT Shell Indonesia, PT Petronas Niaga Indonesia, and PT Total Oil Indonesia are considered more able to provide comfortable gas stations at competitive prices. "If Pertamina doesn't improve the infrastructures, the company may lose competition." Therefore, he asked the government to delay the plan and prepare the supporting infrastructures for car owners to switch to public transportation. Pertamina could also use the delay time to prepare itself to compete with foreign companies. Satya hoped the government could also socialize the use of gas as a cheap alternative to subsidized fuel. He reminded the restriction would also double the consumption of subsidized fuel. "Without thorough preparation, the government will only make the people suffer and injure Pertamina in the downstream sector." The government previously stated it would prohibit all black plate number cars from buying subsidized cars in the Greater Jakarta starting from January 2011. Exception will be given to yellow plate number cars, motorbikes, three-wheeled vehicles, and fishermen. (Bisnis, December 3) Ichsanuddin Noorsy, an expert staff at the Center for the Democratic Economy Study at Gadjah Mada University, stated the subsidized fuel consumption restriction policy would only make people switch from Pertamina-owned gas stations to foreign ones. Following the plan, those who previously bought premium fuel would switch to foreign gas stations if the price spread was small. "Shell, Petronas and Total have lost big on the subsidy given by the government." Country Chairman and President Director of Shell Indonesia Darwin Silalahi viewed the market and consumers had to welcome the government's plan of limiting subsidized fuel consumption. "The market will be more prepared to switch to a more targeted fuel subsidy." According to him, the government's campaign for the past several months had been appropriate. Moreover, sales of non-subsidized fuel, including in non-Pertamina gas stations, had also been increasing. Therefore, he was optimistic to reap up profits if the restriction was imposed. PT Total Oil Indonesia, the operator of Total gas station in Indonesia, also welcomed the restriction policy. "If the restriction policy is implemented, we will support it. However, since the policy has not yet been certain, we cannot comment on that," said Brand & Communication Executive of Total Oil Indonesia Rulianti Syahrul. At the moment, the France-based company operates five gas stations in Jakarta and its surroundings. Total previously exposed its plan to increase the number of its gas stations to 50 gas stations. In the meantime, Pertamina plans to increase pertamax fuel supply by more than 200,000 kiloliters (KL) per day. Vice President Corporate Communication of Pertamina Mochamad Harun promised to maintain pertamax fuel supply if the government implemented the subsidized fuel restriction policy to cater to the surging need and prevent buyers from switching to foreign gas stations. The consumption of premium fuel in Java-Bali represents 60% of the national consumption. In the meantime, the region III marketing unit covering Jakarta, Banten, and West Java records a premium fuel consumption of 20,000 KL per day. According to Harun, the surging pertamax fuel consumption was attributable to the people's increased awareness to buy high-quality fuel. He exposed pertamax fuel sales in October surged to 79,000 KL from 35,000 KL in May. However, one Bisnis source disclosed Pertamina might have to import high octane mogas components-the octane-boosting material-since the current production of pertamax and pertamax Plus fuel would not be able to keep up with the surging consumption on the people's switch from premium fuel to non-subsidized one. Economic price In the meantime, he suggested the government letting subsidized fuel price to reach its economic price of IDR6,000/per liter, so that the people would still be able to buy premium fuel at market price. Lawmaker M. Romahurmuziy also reminded that premium fuel supply outside the Greater Jakarta might be scarce due to the restriction policy. "It can be the case that the people buying subsidized fuel in gas stations located outside the Greater Jakarta (Jabodetabek)." Meanwhile, Pertamina was not worried that the people would switch to Shell, Petronas or Total since Pertamina's fuel products were of better quality. Director of the Center for Public Policy Study Sofyano Zakaria hoped the government could pay attention to the mechanism of subsidy for yellow plate number cars to prevent luxury taxis from getting subsidy. Ahead, he asked the government to have a clearer concept and gradually reduce subsidy to fuel. However, Ichsanuddin argued energy subsidy was still needed since competitiveness had not yet recovered. He illustrated that China could survive crisis since it provided huge energy subsidy. "Fuel subsidy made us more resilient against the 2007-2008 subprime mortgage crisis." The government, he asserted, had been dictated systematically by the power of corporate capitalism. He took example demand for cars increased by an average of 11% when the infrastructure sector found minimum growth. Demand for imported cars also surged significantly by more than 60% "Those imported cars are high-tech ones and need non-subsidized fuel." (10/aph/wiw)

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