Pertamina to lower quality of household kerosene

Dewi Santoso, The Jakarta Post, Jakarta

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.

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.

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.

"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.

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.

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.

Thus, Syafruddin said, as a long-term solution to the kerosene shortage, Pertamina would likely differentiate the specifications for household kerosene from industrial kerosene.

"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.

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.

"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.

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.

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.

"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.

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.

"And sometimes, you cannot even get it, as they've run out," she said.