Indonesia oil deregulation needs caution: Subroto<\/p>\n
SINGAPORE (Reuter): The deregulation of Indonesia's oil
\nproducts market would be done in phases if the country's
\nparliament passes a bill to allow foreign firms to sell directly
\nto the market, former OPEC Secretary General Subroto said
\nyesterday.<\/p>\n
\"In the minds of parliamentarians, the deregulation will bring
\nabout better prices and service for local customers,\" he told
\nreporters after speaking at a chemical conference.<\/p>\n
\"But it can't be done overnight. You have to go through a
\ntransition period and do it gradually before full deregulation is
\nimplemented,\" he said<\/p>\n
Subroto, a former government minister who now chairs the
\nrecently-formed private think tank, The Foundation of Indonesian
\nInstitute of Energy Economics, was the senior official at the
\nOrganization of Petroleum Exporting Countries in the six years to
\nJune 1994.<\/p>\n
He said Indonesia's period of transition towards deregulation
\nwould depend on several factors like the country's infrastructure
\nand how soon consumers are ready to give up subsidies on products
\nlike kerosene.<\/p>\n
He noted that to some parliamentarians, oil product is a
\nstrategic market that should be controlled and managed by the
\nstate.<\/p>\n
The amendment to the Oil and Gas Industry Act was initially
\nscheduled for debate late last year. The bill has been handed to
\nthe office of President Soeharto and is now expected to be
\ndebated later this year.<\/p>\n
Oil analysts have said that the attempt to allow foreign
\nrefiners to sell directly to the market would not happen before
\n1997.<\/p>\n
Subroto said before deregulation could be fully implemented,
\nIndonesia needs to study deregulation in Malaysian and Thailand
\nand the progress of changes in India.<\/p>\n
In deciding to deregulate, Indonesia would have to decide
\nwhether to have one standard price for the whole country, or a
\ndifferentiated price policy, he said.<\/p>\n
Foreign investors have said that Indonesia's closed market is
\nthe main reason why none of the 11 private firms that have been
\ngranted permits to build oil refineries has started the projects.<\/p>\n
Indonesia badly needs additional refining capacity to meet
\nrising demand for oil products, especially diesel and kerosene,
\nand to limit its growing dependence on imports.<\/p>\n
Earlier this month, national oil firm Pertamina announced that
\nthe country would import 34.4 million barrels of diesel in fiscal
\n1996\/1997 (April\/March), nine million barrels more than in
\n1995\/1996. Kerosene imports would also rise from 14.4 million to
\n16.8 million barrels.<\/p>\n
Recent record highs in diesel and kerosene prices have also
\nalarmed Pertamina which is trying to diversify its import sources
\nand to make its monthly oil products purchases discreet so as not
\nto excite oil markets.<\/p>\n
Indonesia is Asia's only OPEC member, but booming demand is
\nexpected to turn it into a net oil importer sometime around the
\nturn of the century.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indonesia-oil-deregulation-needs-caution-subroto-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}