New gas stations get quick approvals

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.