Pertamina asks government to ban foreign fuel retailers from entering Java

The state owned oil and gas firm Pertamina has proposed to the government to temporarily bank the giant foreign fuel retailers from entering the Java Island when the liberalization starts in 2003.

Pertamina marketing and logistic director Harry Purnomo was quoted as saying by the Neraca daily that the government should give more time for Pertamina to make preparation to be able to compete fairly with the foreign giant fuel retailers in the lucrative Java market.

"It is better to open the areas out side Java first. The Java Island is a lucrative market," he said.

Harry said that the foreign giants which were backed up by huge capital such as Shell, British Petroleum, and Caltex could offer the local gas station units a higher margin than what is being offered by Pertamina.

He said that Pertamina currently could only offer a low margin of between 4-5 percent to the gas station units.

He also said that Pertamina only owns 40 gas station units out of the total 2,300 units in the country.

He said that Pertamina should partly acquire at least half of the existing units so that the foreign retailers could not easily influence them.

He said that to realize this, Pertamina needs a huge financing. Assuming that one gas station unit cost Rp 4 billion (US$1=Rp 8,600), and Pertamina wants to acquire 1,000 units, some Rp 2 trillion in investment is needed. (*)