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)