Private firms may enter downstream oil industry
Private firms may enter downstream oil industry
JAKARTA (JP): The government will soon allow private refineries to distribute and sell their products on the domestic market but will continue to control the fuel prices, Minister of Mines and Energy I.B. Sudjana said yesterday.
"We need to revise Law No. 8/1971 to face the free trade and investment era," Sudjana told a House of Representatives' Commission VI hearing, which deals with the industry, mining, manpower and investment.
The new bill, which is still being assessed at the State Secretariat, should be proposed to the House soon, he said.
Law No. 8/1971 grants the state-owned oil company Pertamina a monopoly in processing, distribution and marketing oil on the domestic market.
Meanwhile, Secretary-General of the Ministry of Mines and Energy Umar Said explained yesterday that the owners of the 12 private refinery projects already licensed are still waiting for the bill before they decide as to whether to go ahead with their projects.
"The 12 private refinery projects will be canceled by their investors if we don't allow them to market their products in the domestic market," Umar told reporters.
Some countries, like Singapore and Thailand, allow private refineries to distribute and sell their products on the domestic market, he said.
He said the government will still be able to control the prices because Pertamina will remain the market leader.
He said Pertamina, which has nine refineries with a combined processing capacity of 895,000 barrels per day, will be able to act as the price setter.
The government has licensed 12 private firms to operate refineries with total investments of US$21.2 billion in Aceh, North and South Sumatra, West and East Java, East Kalimantan, South Sulawesi, West Nusa Tenggara and Irian Jaya.
British Petroleum Asia Pacific Pte. Ltd and C Itoh & Co Ltd, the owners of PT Tanjung Uban Refinery, have canceled their plan to build a $1.5 billion refinery plant in Riau, Sumatra Selatan.
A spokesman for the British Petroleum said it had ditched the 125,000 bpd refinery project because the plan was uneconomic.
Meanwhile, Sudjana said the foreign and domestic debt services of the state-owned companies overseen by his ministry will total Rp 3.33 trillion ($1.45 billion) this year.
Pertamina will pay Rp 1.37 trillion in debt services, electricity company PT PLN Rp 1.77 trillion, tin mining company PT Tambang Timah Rp 5.6 billion, general mining company PT Aneka Tambang Rp 94 billion, coal mining firm PT Tambang Batubara Bukit Asam Rp 61 billion and gas company PT PGN Rp 34 billion. (04)