BPH Migas to fight misuse of kerosene

Leony Aurora, The Jakarta Post, Jakarta

To help minimize kerosene misuse in the country, the Downstream Oil and Gas Regulatory Agency (BPH Migas) launched on Wednesday a pilot project for a new distribution system for subsidized kerosene in Tangerang, Banten.

The area was selected because its current monthly consumption averages 18 liter per person, more than quadruple the agency's national estimate on kerosene use at 4.1 liter per person per month, BPH Migas chairman Tubagus Haryono said on the sidelines of the project launch.

"This indicates abuse -- people selling subsidized kerosene to industries," said Tubagus.

Under the new system, which will be applied within two weeks, families in Tangerang may only buy 4.1 liters of kerosene each month per household member. Food vendors and kerosene retailers, who sell the fuel in residential areas, will also have their supplies limited.

Amounts and appointed kerosene agents and distributors will be listed on a so-called control card. People will be prohibited from purchasing kerosene from other parties.

"We will see in three months if such a system works to minimize fuel misuse," said Tubagus.

"We will replicate the model throughout the country if it proves a success."

The significant price difference between the subsidized and market price of fuel has created leeway for smuggling and reselling practices, especially after state oil and gas firm PT Pertamina started applying market prices for local industries in July.

For this month's delivery, industries have to pay Rp 6,400 (63 U.S. cents) per liter of kerosene. Although the retail price for households almost tripled to Rp 2,000 a liter on Oct. 1, when the government raised domestic fuel prices, from Rp 700 previously, the price gap is still wide enough to encourage the illegal practice.

The supervisory role of Pertamina in fuel distribution was handed over to BPH Migas with the implementation of Law No. 22/2001 on oil and gas.

The agency will cooperate with local administrations, which will get Rp 50 per liter sold as a monitoring fee, to control the distribution of kerosene.

"Suppliers that do not follow the new system will have their contracts terminated," said Tubagus. "We will leave the criminal aspect to the police."

Tjandra Putra, Pertamina's general manager of distribution unit III where Tangerang is located, said that the company would assign separate distributors to sell kerosene to agents, retailers and end users.

"We are in the process of dividing the distributors and disseminating the control cards with the local administration," said Tjandra.

According to Tjandra, some 35,000 families would be issued cards.

Presidential regulation does not stipulate that only the poor are eligible to buy subsidized kerosene. Nevertheless, it is usually low-income families who use kerosene to cook.

A study by the University of Indonesia's Institute for Economic and Social Research (LPEM-UI) concluded that last year, some 1.7 million kiloliters of kerosene allocated for poor families vanished.