Indonesia picks Petronas to end fuel supply monopoly

Written by Muklis Ali
Monday, 28 December 2009 16:06

JAKARTA: Indonesia's state oil firm Pertamina has lost its exclusive right to distribute subsidised 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 kilolitres (128,547 barrels) of subsidised 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 Corporindo (AKR)would also distribute 56,500 kilolitres of subsidised diesel oil in Lampung province, in south Sumatra and in the cities of Banjarmasin and Pontianak in Kalimantan, Borneo island.

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

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

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

This year, Indonesia expects 19.44 million kilolitres of subsidised low-octane gasoline and 11.6 million kilolitre 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 subsidised 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 subisidised 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 subsidised oil products — which includes almost all products except for premium motor fuel — in the domestic market. — Reuters