Pertamina disciplines 14 fuel distributors in Central Java

Suherdjoko, The Jakarta Post, Semarang

State oil and gas company PT Pertamina has disciplined 14 kerosene distributors in Central Java for violating their distribution contracts, said a senior official at Pertamina's Central Java and Yogyakarta Marketing Unit IV.

The disciplinary measures were in the form of a reduction in kerosene quotas from Pertamina.

According to M. Sustiadji, the general manager of PT Pertamina's Marketing Unit IV, the 14 companies were found guilty of abusing contracts, which led to a kerosene shortage in the province.

He explained that the 14 distributors had not sold the kerosene to the public, as required by their contracts, but instead sold it to factories or mixed it with diesel fuel for sale to the public.

The practice enabled them to reap higher profits at the expense of the public, he said.

"The illicit practice led to a scarcity of kerosene in Central Java," said Sustiadji, after attending a hearing with Commission B of the Central Java legislative council.

Of the kerosene distributors disciplined, two are based in Semarang municipality, one in Pekalongan municipality, four in Klaten regency, two in Karanganyar regency, three in Sukoharjo regency and two in Surakarta municipality.

According to Sustiadji, the 14 distributors' quotas have been cut by 96.5 kiloliters in total. The penalties were enforced last week and will last three months.

He did not say by how much each distributors' quota was reduced.

"We'll watch the developments in the coming three months. If they continue to violate (their contracts), we'll take harsher measures," he said.

Separately, Sutoyo Abadi, a council member from Commission B, said the penalties were too light. "It is already clear that there was a violation that caused a kerosene shortage. It would be best to suspend their permits for three months, then give them the opportunity to do business again while keeping an eye on them. If they still violate their contracts, just revoke their permits for good," he said.

Due to the kerosene shortage, Pertamina started on April 14 directly supplying kerosene to markets in Central Java. As many as 266 kiloliters has been distributed by tankers and sold directly to the public. The shortage saw retail prices soaring to Rp 1,500 (18 U.S. cents) from Rp 900 per liter.

Sustiadji said his office had requested that Pertamina headquarters increase his unit's kerosene quota to 1,540,000 kiloliters in 2004, up from 1,468,860 kiloliters previously.