Govt to end Pertamina's oil lubricant monopoly

Govt to end Pertamina's oil lubricant monopoly

JAKARTA (JP): The government will soon scrap state oil and gas
company Pertamina's monopoly on the production, import and
distribution of oil-based lubricants, according to Minister of
Mines and Energy Kuntoro Mangkusubroto.

Kuntoro said on Friday that the ministry was preparing a
ruling to replace 1988 Presidential Decree No. 18 which grants
the state company a monopoly on the product.

"The monopoly on lubricants will soon be eliminated. All
business players will be treated equally," Kuntoro said in a
statement.

Under the presidential decree, private companies and
cooperatives are only allowed to recycle used lubricants and
produce and distribute synthetic lubricants.

Kuntoro said the monopoly has stunted development of the
country's lubricant industry and led to a shortage of supplies on
the domestic market.

The limited supply of lubricants has encouraged illegal
practices, including the production of fake lubricants, he added.

Furthermore, Kuntoro said, the presidential decree was no
longer applied uniformly because the government has allowed
several private companies to produce oil based lubricants.

Private lubricant producers in the country include PT
Wiraswasta Gemilang Indonesia, which produces Pennzoil and Eva
Lube; PT Dirga Buana Sarana, which produces Valvoline and Union
Oil; PT Agip Lubrindo Pratama; PT Cemerlang Pelumas Prima; and PT
Panutan Selaras.

These companies used their political connections to obtain
government licenses to produce oil-based lubricants despite the
1988 presidential decree, according to analysts.

Wiraswasta Gemilang is owned by former President Soeharto's
cousin Sudwikatmono and his associate Ibrahim Risyad. Dirga Buana
is partly owned by Soeharto's sister Noek Bressina, while Panutan
Selaras is controlled by Soeharto's eldest son Sigit
Harjojudanto.

Kuntoro said the new regulation would give local producers
sufficient protection from overseas companies to promote the
development of a lubricant industry in the country.

Under the new regulation, the import of oil-based lubricants
with an oil content of 70 percent will only be permissible for
local lubricant producers who have obtained an import license
from the government.

"(With such a regulation) local lubricant producers are
expected to become a host in their own country and they will not
change into importers or traders of foreign products," Kuntoro
said.

The import of synthetic lubricants which have an oil content
of less than 70 percent will not be regulated by the Ministry of
Mines and Energy, but the ministry will check the quality of
lubricants being imported.

He said the government also plans to limit the number of
lubricant producers to ensure that the venture provides a
sufficient return on investments. (jsk)