State oil and gas company PT Pertamina will for the first time lose its monopoly on the distribution of subsidized fuel after downstream oil and gas regulator BPH Migas announced on Monday that it had awarded distribution rights to two private companies, including one from Malaysia.
Malaysia’s Petroliam Nasional Berhad (Petronas) and local company PT Aneka Kimia Raya Corporindo will distribute subsidized fuel next year after winning tenders, BPH Migas head Tubagus Haryono said.
Private companies have been allowed to participate in tenders to distribute subsidized fuel since 2004 when a law passed in 2001 came into force.
Until now, Pertamina has always won the bids on the grounds that it was the only contender with the requisite nationwide fuel distribution network.
Although subsidized fuel distribution is now in practice open to competition, private companies can only distribute a small amount and Pertamina still holds exclusive rights to distribute in Java, the largest market.
Analysts say this limited liberalization of distribution reflects government fears that more radical reform could hurt Pertamina.
Tubagus said Petronas and AKR Corporindo were awarded the rights to distribute 0.2 percent of next year’s subsidized fuel quota of 36.5 million kiloliters.
Petronas’s Indonesian subsidiary, PT Petronas Niaga Indonesia, has the right to distribute 20,440 kiloliters through its four stations in Medan.
Meanwhile, AKR Corporindo has been granted the right to distribute 56,000 kiloliters of diesel, 48 percent less than was initially proposed, to fishermen in North Sumatra, Lampung and Kalimantan.
The 36.5 million kiloliters of subsidized fuel to be distributed next year consists of 21.45 million kiloliters of gasoline, 11.25 million kiloliters of diesel and 3.8 million kiloliters of kerosene. The government pays Rp 556 (6 cents) a liter to companies that distribute subsidized fuel.
This year, the government distributed 19.44 million kiloliters of subsidized gasoline and 11.6 million kiloliters of diesel.
Some analysts questioned how BPH Migas would effectively oversee subsidized fuel distribution by private companies.
“How will the regulator monitor it so that the subsidized fuel will not be misused? Will it impose sanctions on them?” said Sofyano Zakaria, director of the centre for Public Policy Studies (Puskepi).
Tubagus said that as the government gradually dismantles Pertamina’s monopoly over fuel distribution, the regulatory body would step up its oversight to ensure that the fuel was distributed properly.
“We will punish them should they fail to meet the set tasks in distributing subsidized fuel,” he said, adding that the private companies were required to report to his office through an online system.
“As their quotas are small, we don’t think we will find any difficulties in monitoring their subsidized fuel distribution,” Tubagus said.
Shafrudin Omar Hashim, financial controller for Petronas Niaga Indonesia, said his company was fully prepared to distribute the subsidized fuel next year.
“We are ready to start distributing the fuel on January 1,” he said.