Controversy over the new downstream industry policy continues

The government's plan to allow new investors to share Pertamina's oil and gas distribution facilities in a bid to speed up the process of liberalization in the local fuel sales has sparked a heated debate within the oil and gas industry.

BPH Migas, the government's agency in charge of oil and gas downstream sector, said that a regulation was being drafted to allow new players to share Pertamina's under-capacity fuel distribution facilities.

The agency said that allowing the new players to use Pertamina's facilities was the only feasible alternative to encourage new investors to enter the retail sector which is at present controlled by Pertamina.

For new investors, establishing their own distribution facilities would be too expensive, he said.

Director General of Oil and Gas, Iin Arifin Takhyan, said that the regulation on the "open access" policy, which was being drafted by an intergovernmental team, was expected to be completed before the end of this year.

He acknowledged that Pertamina was opposed the new policy. "It is still debated whether or not Pertamina is obliged to follow the open access policy and about the volume of the capacity that should be shared with the new players," he said.

Pertamina's president Baihaki Hakim insisted that the firm now operated its fuel distribution facilities at full capacity. The existing facilities are even not enough to support the firm's operation that the firm still wants to build new facilities.

Pertamina should abandon its exclusive rights in the fuel retail sales and in the refinery industry to comply with the new oil and gas law. The fact that Pertamina has controlled almost all the country's fuel distribution networks has caused a major problem for the new players to enter the fuel retail market. (*)