BPH Migas to fight misuse of kerosene
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.
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.