Govt studies auction mechanism for subsidized fuels

BPH Migas, the regulatory body for oil and gas downstream industries, is currently studying the auction mechanism for the distribution and sales of subsidized fuels in the country in 2008, Kontan reported Wenesday.

 

Tubagus Haryono, the head of BPH Migas, said in Jakarta Tuesday that there would be three options that may be considered in the appointment of companies to distribute and sell the subsidized fuels.

 

He said that the options might include the auction based on the distribution areas, the amount of profit margin and also the fuel products.

 

According to Tubagus, the government is also formulating the minimum requirements that would be imposed to companies interested in taking part in the tender. "For, example, those interested in the tender should have already operated in two distribution areas such as Java and outside Java," he said.

 

He said that they should also build or rent sufficient fuel storage facilities to support the distribution of the subsidized fuels.

 

A number of companies have expressed their interest to take part in the distribution of subsidized fuels next year. They include Shell, Petronas, Sigma Rancang Perdana and Elnusa.

 

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 requirement. (*)