Pertamina ready to continue distribution of subsidized fuel

State owned oil and gas company Pertamina said it is ready to continue handle the distribution of subsidized fuel even after the Public Service Obligation (PSO) rights awarded to the company is terminated in January, next year, Investor Daily reported on Tuesday.

Pertamina’s vice president Mustiko Saleh said in Jakarta on Monday that compared to other companies, Pertamina would be much more ready to handle the distribution of the subsidized fuel.

“But we want the assignment to carry out the distribution of the subsidized fuel to be made through a direct appointment process, rather than through an auction,” he was quoted as saying.

The PSO rights which allow Pertamina to solely distribute the subsidized fuel in the country would end in January next year in line with the liberalization of the fuel retail market in the country.

With the removal of the PSO rights, other oil companies, both foreign and local, are allowed to take part in the distribution of the subsidized fuel. But most of the private companies would unlikely be able to meet the requirements to do the task such as having enough retail networks including fuel storage and station facilities.

According to Mustiko, if Pertamina is appointed, it would be able to get revenues of between Rp 900 billion to Rp 1 trillion a year from the distribution of the subsidized fuel. “The money is big enough to reduce the government’s subsidy for the sale of liquefied petroleum gas (LPG),” he added.

Pertamina’s plan to continue the distribution of the subsidized fuel received a strong support from some members of the House of Representatives (DPR). They said that Pertamina should be allowed to continue the distribution of the subsidized fuel until other companies are ready to take part in the distribution works. (*)