Companies must have gas stations outside Java to partake in PSO
Companies must have gas stations outside Java to partake in PSO
Leony Aurora, The Jakarta Post, Jakarta
New players in the downstream oil business will not be allowed to
distribute subsidized fuel if they do not operate gas stations
outside Java, which could give state oil and gas firm PT
Pertamina a de facto monopoly after the sector is liberalized.
No plans for gas stations outside Java have been submitted by
players such as Royal Dutch Shell Plc. or Malaysia's Petronas,
which appear to be the most prepared to take part in the retail
sector, the chairman of the Downstream Oil and Gas Regulatory
Agency, Tubagus Haryono, said on Tuesday.
"We will not let (new players) supply subsidized fuel only in
Java," he said, adding that they appeared to be technically
unprepared to participate in the public service obligation (PSO)
by next year.
"If they are not ready, we will appoint Pertamina to
distribute the fuel," said Tubagus.
Under Law No. 22/2001 on the oil and gas industry, Pertamina
will no longer hold a monopoly on the distribution of fuel
beginning on Jan. 1, 2006.
The government will divide the country into four trading
zones: the first zone is Java and Bali; the second is Sumatra;
the third is Kalimantan, Sulawesi, Maluku and Papua; and the
fourth is West and East Nusa Tenggara.
Each province will be designated as a developed, less-
developed or underdeveloped area. A company that wants to
distribute subsidized fuel in a developed area, like Java, which
consumes larger volumes of fuel, will be required to build and
operate gas stations in underdeveloped areas, such as Papua.
Shell was the first new player to enter the market, opening a
retail outlet that sells unregulated high-octane premium gasoline
on Oct. 30 in Karawaci, west of Jakarta.
Subsidized-fuel distribution, however, is considered much more
lucrative, accounting for up to 95 percent of total fuel
consumption here.
Shell Indonesia's vice president for external and business
affairs, Wally Saleh, said the company was waiting to see the PSO
regulation.
"We hope to participate in the PSO as soon as possible. Let's
see how the regulation is," he said, declining to comment if
Shell wad ready to operate outside of Java.
The Ministry of Energy and Mineral Resources is scheduled to
submit a draft of the PSO concept to the President this week. The
draft is expected to be signed before Nov. 23.
Tubagus said new players might want to cooperate with existing
private gas stations outside of Java -- Pertamina owns only a few
dozen of the some 2,600 gas stations spread across the
archipelago -- to speed up their retail development.
He quickly added, however, that most stations already had
long-term contracts of between 10 years and 30 years with
Pertamina.