Pertamina offers discounts for fear of competition
Leony Aurora, The Jakarta Post, Jakarta
Just like stores that slash prices for the Islamic Idul Fitri holiday drawing near, state oil and gas firm PT Pertamina is offering its own discounts of between 1 percent and 4 percent for oil-based fuels sold to industry starting November.
The size of the discount will depend on the consumer's monthly usage, Pertamina's head of fuel division Achmad Faisal said on Monday.
Industries that use at least 100 kiloliters (kl) per month will get a 1 percent discount, while those buying more than 3,000 kl per month, such as cement plants, will get a 4 percent price cut, he said.
"The competition era has started. Hopefully, (the price cut) will compel industry to remain as Pertamina's customers," said Faisal.
The government has opened the door for new players to supply fuel to industry since it gave the nod for Pertamina to apply market prices -- more than double subsidized prices at the time -- for fuel sold to the sector starting July, in light of ballooning subsidies.
Local private company PT Aneka Kimia Raya (AKR) Corporindo has been supplying fuel to industry in East Java since October, targeting to import between 200,000 and 250,000 kl per month within one year of operation. Another company is planning a similar operation for Medan.
The door to competition will open wider as multi-national companies like Malaysia's Petronas and Netherlands' Shell start distributing unsubsidized fuel to regular customers starting late November.
Faisal also said that prices for most fuel types for industry rose slightly in November. Kerosene rose by 1.25 percent to Rp 6,480 a liter, while diesel fuel rose by 2.83 percent from Rp 6,000 per liter to Rp 6,170 a liter.
The price for premium gasoline declined from Rp 6,290 per liter to Rp 5,890 a liter, he added.
"The prices are applicable starting Nov. 1."
The international bunker prices for November are also higher by some 3 percent on average as compared to the previous month's prices. A liter of diesel fuel costs 60.30 U.S. cents, diesel oil 58 cents and fuel oil 37.80 cents.
To attract consumers, Pertamina may also offer other services in the future, said Faisal. The company may start delivering fuel to the customer's front door instead of having them come and buy fuel at the depots.
"Pertamina may cover transport and insurance costs," said Faisal.
Pertamina now imposes prices for industry in accordance to the Mid Oil Platts Singapore (MOPS) price, plus an additional 15 percent for distribution services and other costs.
Pertamina began applying market prices for oil, gas, mining and export-oriented industries, as well as entities that use more than 500 kl of fuel, in July. The following month, it included more industries, including fishery companies, those located in bonded zones, independent power producers and entities that use more than 24 kl of fuel.
With the implementation of Presidential Decree No. 55/2005 on the new domestic fuel prices, no subsidized fuel quota is set aside for industry, except for small enterprises and fishermen, who will receive a monthly quota of eight kiloliters (kl) each.
Fuel prices for industry in November
Type of fuel Oct. price Nov. price Difference
Premium gasoline Rp 6,290 Rp 5,890 -6.35%
Kerosene Rp 6,400 Rp 6,480 1.25%
Diesel fuel Rp 6,000 Rp 6,170 2.83%
Diesel oil Rp 5,780 Rp 5,940 2.77%
Fuel oil Rp 3,810 Rp 3,870 1.83%
Source: Pertamina