Government to open auction for subsidized fuel

Newly licensed oil distributors including major foreign companies such as Shell and Petronas will be allowed to sell subsidized fuels when the domestic fuel retail market is officially opened to new players in November, this year, Neraca reported on Saturday.

Tubagus Haryono, the chief of BPH Migas, the government's regulator for oil and gas downstream industry, said on Thursday that the sales of the subsidized fuels would be auctioned so that all oil distributors including Pertamina would have the same opportunities to sell the subsidized fuels including kerosene, diesel oil and Premium fuel, in the country.

With the liberalization of the fuel sales, Pertamina which at present holds the sole rights to distribute the fuels in the country would have to compete with new retailers such as Shell, Petronas and Elnusa.

"Those who offer the lowest prices will win the tender," he said. "If, for example, in the distribution of diesel oil in East Java, Shell offers to sell diesel oil at Rp 3,000 per liter, while Pertamina offers to sell the fuel at Rp 3,100 per liter, Shell will be given the rights to sell the fuel in the province," he added.

He said that Pertamina would remain the market leader, despite the liberalization of the retail fuel market. "Pertamina will sell all the fuel produced by the country's oil processing plants which supply about 70 percent of the fuel needs," he added.

According to him, the sales of the other 30 percent of the fuel needs which should be imported would be offered to all the existing distributors including Pertamina and the newly licensed fuel retailers. (*)