Pertamina to lower quality of household kerosene
<p>Pertamina to lower quality of household kerosene</p><p>Dewi Santoso, The Jakarta Post, Jakarta</p><p>State-owned oil and gas company PT Pertamina said on Friday that
it planned to lower the quality of kerosene used for households
in an effort to resolve a price disparity, which was believed to
be the main cause of the current kerosene shortage.</p><p>Pertamina commissioner Syafruddin A. Temenggung said the main
cause of the kerosene shortage was the disparity in prices for
household and industrial buyers that had encouraged industries to
buy subsidized household fuel.</p><p>Household kerosene costs Rp 700 (8.2 U.S. cents) per liter,
while unsubsidized industrial-use kerosene costs between Rp 1,800
and Rp 2,200 per liter, which has prompted retailers to sell the
heavily subsidized kerosene to industrial companies for a higher
profit.</p><p>"No matter how sophisticated our distribution system, as long
as there is a price disparity, there'll always be a black market,
causing a kerosene shortage," said Syafruddin.</p><p>M. Awi Adil, spokesman for Pertamina Marketing Unit III, which
overseas Jakarta, West Java and Banten, had said earlier that he
suspected industrial companies bought the household kerosene on
the black market.</p><p>Awi said that household demand for kerosene in the three
provinces stood at 12,986 kiloliters (kl) per day, equivalent to
389,580 kl per month, whereas industry demand was only around
25,000 kl per month.</p><p>Thus, Syafruddin said, as a long-term solution to the kerosene
shortage, Pertamina would likely differentiate the specifications
for household kerosene from industrial kerosene.</p><p>"We will probably reduce the quality of household kerosene,"
he said, as industries would thus be discouraged from buying the
lower quality product, despite the lower price.</p><p>As a short-term solution, Pertamina launched on the same day a
select market operation, cutting kerosene supplies to retailers
and instead selling directly to household consumers in areas
affected by supply shortages.</p><p>"We'll continue to conduct the select market operations. It
will not change supplies in the market, as we'll sell the same
volume of kerosene," said Syafruddin.</p><p>He added that the market operations were vital because in
Jakarta alone, household kerosene consumption had increased to an
average of 10 liters per day from 3.6 liters per day. The heavily
subsidized kerosene is usually used by low-income households.</p><p>Ina, a resident of Kwitang subdistrict, Central Jakarta, was
one of dozens of people queuing on Friday morning at the
Pertamina Marketing Unit III building in Kwitang, waiting to buy
kerosene directly from the company.</p><p>"It's the second time I've waited in line here. I don't mind
standing for one hour, as I can buy kerosene at only Rp 900 per
liter," said the 34-year-old mother.</p><p>She added that although each person was limited to a maximum
purchase of only five liters, it was worth the wait, as otherwise
she would have to buy kerosene from retailers for Rp 1,500 per
liter.</p><p>"And sometimes, you cannot even get it, as they've run out,"
she said.</p>
it planned to lower the quality of kerosene used for households
in an effort to resolve a price disparity, which was believed to
be the main cause of the current kerosene shortage.</p><p>Pertamina commissioner Syafruddin A. Temenggung said the main
cause of the kerosene shortage was the disparity in prices for
household and industrial buyers that had encouraged industries to
buy subsidized household fuel.</p><p>Household kerosene costs Rp 700 (8.2 U.S. cents) per liter,
while unsubsidized industrial-use kerosene costs between Rp 1,800
and Rp 2,200 per liter, which has prompted retailers to sell the
heavily subsidized kerosene to industrial companies for a higher
profit.</p><p>"No matter how sophisticated our distribution system, as long
as there is a price disparity, there'll always be a black market,
causing a kerosene shortage," said Syafruddin.</p><p>M. Awi Adil, spokesman for Pertamina Marketing Unit III, which
overseas Jakarta, West Java and Banten, had said earlier that he
suspected industrial companies bought the household kerosene on
the black market.</p><p>Awi said that household demand for kerosene in the three
provinces stood at 12,986 kiloliters (kl) per day, equivalent to
389,580 kl per month, whereas industry demand was only around
25,000 kl per month.</p><p>Thus, Syafruddin said, as a long-term solution to the kerosene
shortage, Pertamina would likely differentiate the specifications
for household kerosene from industrial kerosene.</p><p>"We will probably reduce the quality of household kerosene,"
he said, as industries would thus be discouraged from buying the
lower quality product, despite the lower price.</p><p>As a short-term solution, Pertamina launched on the same day a
select market operation, cutting kerosene supplies to retailers
and instead selling directly to household consumers in areas
affected by supply shortages.</p><p>"We'll continue to conduct the select market operations. It
will not change supplies in the market, as we'll sell the same
volume of kerosene," said Syafruddin.</p><p>He added that the market operations were vital because in
Jakarta alone, household kerosene consumption had increased to an
average of 10 liters per day from 3.6 liters per day. The heavily
subsidized kerosene is usually used by low-income households.</p><p>Ina, a resident of Kwitang subdistrict, Central Jakarta, was
one of dozens of people queuing on Friday morning at the
Pertamina Marketing Unit III building in Kwitang, waiting to buy
kerosene directly from the company.</p><p>"It's the second time I've waited in line here. I don't mind
standing for one hour, as I can buy kerosene at only Rp 900 per
liter," said the 34-year-old mother.</p><p>She added that although each person was limited to a maximum
purchase of only five liters, it was worth the wait, as otherwise
she would have to buy kerosene from retailers for Rp 1,500 per
liter.</p><p>"And sometimes, you cannot even get it, as they've run out,"
she said.</p>