'Old players' in retail market will receive protection

Director General of Oil and Gas, Iin Takhyan has said that the government will continue to protect old players in the country?s fuel retail market such as Pertamina and Perusahaan Gas Negara (PGN) despite the liberalization program, Bisnis Indonesia reported on Wednesday.

Iin said that the policy to impose ceiling price would, for an example, be continued in the future so that both consumers and retailers could be protected from the sharp increase in fuel prices in the international market.

"The ceiling price will remain despite the entry of foreign players in the retail market. This policy is still needed in order to protect consumers," he said, adding even in the United States, a market mechanism can not be fully implemented. "In another word, the government will continue to provide a subsidy if the fuel price exceeds the level of the existing ceiling price," he added.

The exclusive rights now held by Pertamina and PGN to distribute fuel and gas would be gradually removed as part of the government?s liberalization program in the oil sector. Foreign oil retail companies will be allowed to enter the local retail market beginning 2006.

Chairman of the oil regulatory body, Tubagus Haryono, said that the agency was preparing to a new regulation in order to guarantee a fair competition in the retail fuel market. "Old players such as Pertamina and PGN will be included," he said but he did not elaborate what kinds of roles that would be given to the two state owned companies in the oil retail business.

Director of Pertamina?s oil downstream operation, Muchsin Bahar, said Pertamina would support activities of the regulatory body. "But the task given to Pertamina should be clear," he said. (*)