11 people arrested for hoarding fuel

Oyos Saroso, The Jakarta Post, Bandarlampung

Lampung Police Headquarters detained on Saturday 11 people for alleged fuel hoarding.

Lampung Police chief Brig. Gen. Rasyid Ridho said the suspects had been caught red-handed buying massive volumes of fuel from several gas stations in Bandarlampung city.

From them, the police confiscated in total 6,700 liters of kerosene, 16,670 liters of diesel fuel, 10,700 liters of premium gasoline and seven trucks. "We are still investigating the nature of their activities," said the one-star police general.

It has become common for irresponsible parties to buy subsidized retail fuel in large volumes from gas stations and fuel traders, with the intention of selling it later on for industrial use. Industries buy fuel from these agents as they offer them better prices than those set by state oil and gas company PT Pertamina, which are higher than retail prices.

Although the practice is illegal it continues to thrive. Fuel is often smuggled to industries in Singapore or other neighboring countries, which are prepared to pay a higher price.

The arrest of the 11 people came after the Indonesian Consumers Association (YLKI) publicly stated recently in Bandarlampung that many industries in the province have bought fuel intended for retail and household use.

According to the YLKI, the practice has led to fuel scarcities in the province, depriving the public.

Shortages occur after industries buy up retail-priced kerosene, for example, causing the price of kerosene to soar. Likewise, "hoarders" may buy the entire available supply of diesel fuel from an area's gas stations and diesel traders, causing the price of the fuel to skyrocket. The hoarders then sell the diesel fuel to industries.

According to data from Pertamina Lampung, only 22 companies have so far purchased fuel directly from Pertamina, while there are hundreds of industries in the province. The other companies allegedly buy their fuel from illegal suppliers.