New gas stations get quick approvals

Leony Aurora, The Jakarta Post, Jakarta

In an apparent attempt to get ahead in the new competitive fuel retailing environment, state oil and gas firm PT Pertamina has developed a new system to cut time and hassle for investors interested in establishing Pertamina pump stations.

Potential investors need only to log onto Pertamina's website and their applications will be reviewed and contracts signed within 15 days, should they meet all the requirements, the company's fuel division head Achmad Faisal said on Tuesday.

"We've completely transformed the system," he said. All pump stations will be connected online and the available stock monitored in real time. Additional fuel can be requested electronically, slashing the time and paperwork previously required, Faisal said.

Pertamina will also take over the management of fuel transportation to tighten control and minimize fuel theft. It is widely known that many fuel tankers often make "pit stops" to sell fuel along the journey from depots to stations.

"Fuel loss has always been a major problem for gas station owners," said Faisal. "We will guarantee that the loss remains within tolerable limits."

The new system, which will be applicable for gas stations in Java, Bali and Medan, North Sumatra, Pertamina will classify the stations into five categories depending on the estimated daily offtake -- the lowest under 10,000 liters per day and the highest over 50,000 liters. Owners must pay a royalty of between Rp 100 million (US$10,240) and Rp 500 million for a five-year contract.

"The fund will be used for training, monitoring and marketing purposes. We will also help them with the management of the station," said Faisal.

Competition has started to creep into the market even before Pertamina's monopoly in the downstream sector officially ended in November.

Royal Dutch Shell Plc. has opened its first outlet in Lippo Karawaci in Tangerang, west of Jakarta, selling unsubsidized fuel, with the second station in South Jakarta already nearing completion. Malaysia's Petroliam Nasional Bhd. has also secured licenses to open pump stations.

The government has postponed the liberation of the subsidized fuel distribution until January next year. Pertamina will very likely retain its rights as the sole distributor of subsidized fuel -- which accounts for 95 percent of all fuel sold in the country -- for another year as other players are not ready to open stations outside Java as required by the government.

Pump stations, which take 4 percent off the subsidized prices as sales margin, are enjoying higher revenues after the government hiked fuel prices by an average of 126 percent in October.

After January, Pertamina will have the power to determine the margins, which will be divided into three categories. Stations that offer better service will get a higher margin.

"It'll be an incentive for station owners to improve their service," said Faisal.

Of the 3,157 pump stations operating across the archipelago, Pertamina owns only some 40 units. The others are owned by private investors who have contracts with Pertamina.

Under the new system, the state firm expects to attract investors to build at least 80 new pump stations next year and to convert 120 existing ones.