Pertamina under pressure to continue unleaded gasoline

JAKARTA (JP): Retailers of unleaded gasoline for two-stroke engines (BB2L) came to the office of state-own oil company Pertamina on Thursday, demanding a cancellation of the company's decision to cease production of the gasoline by January 2002.

Grouped under the Association of BB2L Entrepreneurs (APBB) and the Communication Forum of BB2L Retailers (FORSI BIRU), the retailers said the decision would put an end to their business.

"We're only small retailers, it will kill our business. There will be some 15,000 people who will suffer," said FORSI BIRU's chairman Nurmarzuki in a meeting with Pertamina officials.

According to Nurmarzuki, there are over 1,000 gasoline kiosks across the country which is a source of livelihood for over 4,000 employees.

He added that these people had invested some Rp 30 million (US$3,157.9) to Rp 100 million in the business.

"We haven't reached the break even point yet...Even if Pertamina delays (a stop of production) till 2005, we still won't reach it," Nurmarzuki said adding that due to a slowdown of production by Pertamina from the usual 2,000 kiloliters since October business has been declining.

"In October, we didn't receive supplies for a week. In November, there wasn't a supply at all while through December and January, we only received 50 percent of our required supply," he charged.

A Pertamina member of staff from the processing unit, Bambang Suwondo, cited technical errors at the oil rigs in Plaju, South Sumatra as the reason for the recent slowdown.

"But we have fixed it. At least for the next 37 days, there is enough supply," he said, adding that average monthly production is 40,000 barrels.

Meanwhile, head of Pertamina's fuel division at the company's Directorate of Local Distribution Supply Muhammad Faried told the retailers that the decision to stop producing such fuel could not be reconsidered.

"We suffer high material losses by producing that kind of gasoline because there is no subsidy from the government," he said.

According to Faried, production costs for gasoline is Rp 1,450 per liter while it is sold for only Rp 900 per liter. The price cannot be raised further as a government regulation stipulates that such gasoline cannot be more expensive than premium leaded fuel which sells at Rp 1,150 per liter.

The unleaded gasoline for two-stroke engines are usually used by motorcycles and three wheeled Bajaj's.

The Jakarta branch of the Indonesian Forum for the Environment (Walhi Jakarta) recorded that out of a total of 17.9 million vehicles in Indonesia, 12.88 million of them are motorcycles.

In Jakarta, there are some 2.08 million motorcycles out of a total of 3.53 million vehicles.

Faried suggested that retailers opt for selling premium, diesel fuel and kerosene and erect small gas stations.

But the idea was rejected by retailers saying that it would need even greater investment during a period when competition remains tight.

The meeting ended with Pertamina's promise to conduct another meeting and find a better solution.

The production of unleaded gasoline for two-stroke engines began in 1998 as part of the government's program to reduce airborne lead content.

Lead is added to fuel to boost engine performance but has been proven to be a cause of environmental and health problems. Health costs related to leaded gasoline is estimated at Rp 2 trillion (about US$210.5 million) annually.

Separately the coordinator of the joint committee for the phasing out of leaded fuel (KPBB) Ahmad Safrudin said that Pertamina's decision just shows how poor the government's awareness is in reducing air pollution.

"Yes, BB2L will be replaced by unleaded premium. But based on experience, we're not that optimistic that the plan will be realized as scheduled in July," said Ahmad, who is also executive director of Walhi Jakarta, referring to Pertamina's decision to provide unleaded premium for Jakarta starting July.

"A decree which specifies unleaded gasoline hasn't even been issued. Therefore we demand Pertamina continue production of BB2L until unleaded premium supply is truly realized," Ahmad said. (hdn)