Pertamina vows to resolve kerosene deficit in the markets

Fitri Wulandari, The Jakarta Post, Jakarta

State oil and gas firm PT Pertamina plans to intensify market operations as a temporary measure to help resolve kerosene shortages faced by households in Jakarta and other cities.

Pertamina spokesman M. Harun said the company would cut kerosene supplies to retailers and sell directly to household consumers in areas hit by kerosene shortages.

"We will launch a select market operation, and are still discussing the mechanism," he told The Jakarta Post on Tuesday.

Harun said the kerosene shortage reemerged after the company halted a program earlier this year that differentiated kerosene for households -- which were tinted green -- from kerosene for industrial use.

But he said the color-coding program costed the company around Rp 12 billion (US$1.41 million) per year to tint the heavily subsidized kerosene supply for households, particularly those in the low-income bracket.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro previously said the shortages had occurred due to the disparity between the price of household and industrial-use kerosene.

Household kerosene costs Rp 700 per liter, while unsubsidized industrial-use kerosene costs between Rp 1,800 and Rp 2,200, which has prompted retailers to sell kerosene to industries for a higher profit.

M. Awi Adil, spokesman for Pertamina Marketing Unit III that oversees Jakarta, West Java and Banten, said industry demand for kerosene was lower than household demand.

Household demand for kerosene in the three provinces stands at 12,986 kiloliters (kl) per day, or 389,580 kl per month, while industry demand is only around 25,000 kl a month, Awi said.

"We suspect that industries buy the subsidized fuel from the black market," Awi told the Post.

He said the office was targeting their market operation in areas experiencing a shortage based on reports from the public and media.

"We have also set up a team to monitor kerosene supply in areas far removed from Pertamina depots," Awi said.

According to a special government team tasked with monitoring the abuse of subsidized fuel (TP3BBM), household consumption of kerosene has gone over the set limit of 3.75 liters per month per family.

In Jakarta alone, household kerosene consumption averages 10 liters monthly per family.

Slamet Singgih, head of the TP3BBM, said the Pertamina market operation would not be effective in resolving the kerosene shortage completely, as the sale of subsidized fuel to industries would restart once the operation ended.

He said Pertamina should be more active in exposing the root of the problem and in monitoring retailers.

The TP3BBM team has so far identified 63 violations by retailers in distributing kerosene that have led to the shortage.

Slamet said Pertamina had penalized those retailers that violated fuel distribution regulations, including cutting retailers' kerosene quota to closing down retailers in the case of severe violations.