BPH Migas to review decree on subsidized fuel retail
Monday, December 4 2006 - 01:11 AM WIB
The move is made in response to protests by new players in the downstream sector who are interested to sell subsidized fuel but could not engage in the business due to the decree.
BPH Migas? head Tubagus Haryono said he had met with the representatives of the new players on the issue but reached no conclusion.
?During the meeting, there was a proposal to change the definition of fuel distribution areas so that it becomes more detailed. It is no longer (fuel distribution) zone but province,? Tubagus said.
The Oil and Gas Law of 2001 gives rights to any companies to distribute fuel in the country but BPH Migas maintains state oil and gas company PT Pertamina as the sole distributor of the best-selling subsidized fuel in order to compensate the firm?s losses from its operation in remote areas. Some oil and gas giants have entered the country?s fuel retail business but thus far they only opened outlets in developed areas, such as big towns in Java.
Tubagus promised to give equal treatment to all players in the country, but he noted BPH Migas will still maintain Pertamina as the sole distributor of subsidized fuel for 2007 as other companies are not yet ready to distribute such fuel.
?The fact is new companies or players who are interested (to distribute the fuel) are not ready yet. For the assignment (to distribute subsidized fuel) for 2007, which we have to decide in one month from now, it seems impossible to carry out a tender. The government will give the assignment to Pertamina. Pertamina will thus automatically get an assignment extension,? Tubas said, while noting that new players could cooperate with Pertamina on business-to-business basis to distribute such fuel. (*)