Pertamina refuses to open aviation fuel market

State-owned oil and gas company Pertamina has rejected the government's plan to allow new distributors to sell aviation fuel (avtur) in the country's major airports such as Jakarta, Surabaya, Denpasar, Medan and Ujung Pandang, saying the move will be unfair for the company, Bisnis Indonesia reported on Monday.

"If the market liberalization is carried out only on major airports while Pertamina is still required to sell aviation fuel in small airports, it will be unfair," Pertamina's president director Ari Soemarno said in Jakarta last week.

According to Ari, if the government intended to open the aviation fuel market, it should be carried out in the country's all airports. He said that at present Pertamina provided a cross subsidy in the sale of avtur so that the price gap of avtur sold in one airport and another won't be so large.

"The price of avtur sold in the Soekarno-Hatta airport and those sold in Jayapura, Papua can be reduced to a maximum of Rp 500 per litter thanks to the cross subsidy," he said.

Minister of Transportation Hatta Rajasa announced recently the government's plan to open the avtur market in major airports to new distributors. As part of the liberalization, the government will open a tender to appoint a consortium that will sell avtur in major airports.

He said that the opening of the avtur market in major airports would be carried out in stages, with the first one to be conducted in the newly expanded Juanda Airport in Surabaya, East Java.

Ari said that if the government went ahead with the avtur market liberalization, Pertamina would have to sell the fuel at a different price depending on the economic viability of each airport.

The avtur demand in the country reaches a total of 2.4 million kiloliters a year. About 40 percent of the total are sold through the Soekarno-Hatta airport. (*)