Shell Indonesia retail operations await subsidy move

Shell Indonesia retail operations await subsidy move

Phelim Kyne
Dow Jones/Jakarta

An Indonesian unit of Royal Dutch Shell PLC has delayed the
launch of a long-planned line of Shell-branded retail gasoline
stations until the government clarifies its fuel price subsidy
policy, a company executive said recently.

Shell wants details on how the government will regulate
subsidized gasoline sales before the company starts retail
operations, Shell Indonesia's external and corporate affairs
head, Wally Saleh, told Dow Jones Newswires.

"We can start doing the business (now) if we want to...but we
don't know how the subsidized fuel will be managed," Saleh said.

"It's subject to further government rules and their guidance,
(so) at the moment we're still waiting for that."

Saleh spoke on the sidelines of the Asian Forum on Corporate
Social Responsibility conference in Jakarta.

Shell's retail gasoline operations' delay reflects the revenue
and investment losses caused by the government's dithering over a
firm timetable on the eventual phasing out of fuel price
subsidies.

The government granted licenses in February 2004 to Shell and
five other foreign firms to import and sell oil products in the
country, ending the decades-long monopoly of state oil and gas
company PT Pertamina.

A senior executive of Jakarta-based AKR Corporindo told Dow
Jones Newswires in April that the firm had signed a contract with
Shell Indonesia to transport fuel to up to a dozen Shell-branded
gasoline stations that the petroleum giant plans to open in
Indonesia.

Saleh declined to confirm the number of Shell-branded gas
stations the company plans to eventually launch, but said Shell
would like to begin retail operations "as soon as possible",
without elaborating.

"It's not just a matter of ending the subsidies...(we) want to
know what the rules are," he said.

"To construct stations...we have plans, but the plans will be
subject to further study."