RI needs to open oil market by 2000<\/p>\n
SINGAPORE (Reuter): Indonesia must start to open its domestic
\noil product market by 2000, ahead of eventual market
\nliberalization under the ASEAN Free Trade Area (AFTA) in 2003,
\nformer OPEC secretary general Subroto said yesterday.<\/p>\n
Indonesia has already carried out the first step by announcing
\nincentives for the private sector to build refineries, he told
\nreporters on the sidelines of the Asia Pacific Petroleum
\nConference (APPEC) in Singapore.<\/p>\n
President Soeharto, in a decree dated July 31, issued new and
\nclearer guidelines to woo the private sector to build refineries
\nand sell their products to the domestic market, but only through
\nstate-oil company Pertamina.<\/p>\n
But the incentives fell short of ending Pertamina's monopoly
\nin the domestic market so as to allow the private sector to sell
\ndirectly to the retail market.<\/p>\n
Indonesian Mines and Energy Minister Ida Bagus Sudjana also
\ntold reporters that despite the new regulations, \"the retail
\nmarketing continues to be done by Pertamina.\"<\/p>\n
Subroto said private sector refineries were the first step.
\nThe next step should be to allow the private sector refineries
\ndirect access to the retail market.<\/p>\n
\"Ultimately the refineries are to be allowed into market,\" he
\nsaid.<\/p>\n
Subroto, who heads a private think tank, The Foundation of
\nIndonesian Institute for Energy Economics, said by 2003 when AFTA
\nis in full swing, there should not be any barriers of products
\nfrom Malaysia, Thailand and other regional countries.<\/p>\n
So it was necessary for Indonesia to start competing with
\nimports by building more refineries to meet its growing needs,
\nwhich are growing at an estimated six percent a year.<\/p>\n
Indonesia, which now has a refining capacity of 989,500
\nbarrels per day (bpd), needs another one million bpd of oil
\nproducts by 2003 to meet demand, he said.<\/p>\n
\"If you think about 2003 when AFTA is in application, my own
\nfeeling is that by 2000 or thereabout, some kind of deregulation
\nof the domestic market should be in place. We should look at this
\nas a kind of process,\" Subroto said.<\/p>\n
Indonesian and foreign private sector investors have long
\nasked the government to allow them to retail their products
\ndirectly before committing themselves to build refineries.<\/p>\n
Sudjana, in a speech to APPEC said that liberalization of
\nglobal trade will force governments to create a conducive
\nenvironment to attract investors.<\/p>\n
\"Approaching the globalization era, Indonesia is ready to face
\nthe challenges by joining AFTA in 2003, APEC (Asia Pacific
\nEconomic Cooperation) in 2010 and APEC-2 in 2020,\" he said.<\/p>\n
A source close to Pertamina said in reforming the market, the
\ngovernment would also have to consider its subsidy scheme it and
\nwhether consumers were ready to pay higher prices if subsidies
\nwere lowered or removed.<\/p>\n
The government also needs to ensure that the private sector
\nperforms the social role of supplying to the more remote areas,
\nrather than focus on the more lucrative urban markets, the source
\nsaid.<\/p>\n
Sudjana said on Monday the government might raise domestic
\nfuel prices, especially diesel, to reduce the subsidy, which has
\nbeen climbing due to the rise in the U.S. dollar.<\/p>",
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