BPH Migas to simplify regulation on subsidized fuel sale

Private companies will be allowed to sell subsidized fuel through direct appointment mechanism in the country beginning next year to compete with state-owned oil and gas company PT Pertamina which has so far held the exclusive rights to sell the subsidized fuel.

 

Tubagus Haryono, the head of the regulatory body for oil and gas downstream industry BPH Migas, said in Jakarta Tuesday that the agency will simplify the existing regulation so that private companies would be able to take part in the sale of the subsidized fuel.

 

"The distribution areas will be further split, perhaps by province," he said.

 

With the simplification of the regulation, a private company is not only able to operate a gasoline station in a province but also to sell subsidized fuel. The government will offer a profit margin of up to 15 percent for the sales of the subsidized fuel.

 

"They (private firms) can lease other required infratsructures. Shell and Petronas plan to build gasoline stations outside Java. Other foreign oil and gas companies, Chevron and Total will also enter into (the fuel retail business)," Tubagus said.

 

Under the existing regulation, the country's fuel market is divided into four distribution areas comprising of Sumatra (I), Java and Bali (II), Kalimantan and Sulawesi (III) and Papua and Nusa Tenggara (IV).

 

Private companies willing to be involved in the sales of the subsidized fuel should be able to distribute in at least two distribution areas, with their own distribution facilities such as fuel storage and fuel transportations.

 

The private companies have been allowed to sell non-subsidized fuel since November 2005 as part of the liberalization in the country's fuel retail market. However, Pertamina has since retained its exclusive rights to sell the subsidized fuel because private companies have not been able to meet the requirements. (godang)