"Pertamina should be protected from unfair competition"

Pertamina?s president director Baihaki Hakim has asked the government to issue a special guideline that can protect the state owned oil and gas company from possible unfair from world?s oil giant when the oil downstream industry is fully implemented, Neraca reported on Monday.

"Basically Pertamina is prepared to free competition era, but please? the government also protects us," Baihaki told reporters in Jakarta late last week.

According to him, the government should at least require new oil distributors who do not have refinery plants to provide fuel stocks for at least for 50 days. " Frankly speaking without such a guideline, it is difficult for Pertamina to compete," he added.

The new oil and gas law, which was introduced early this year, will gradually remove the monopoly held by Pertamina both in the oil production and oil downstream activities such as in the fuel retail sector. Many world oil giants have expressed their intention to enter the retail market which will be formally be opened to free competition within the next few years.

Baihaki said major world?s players in the fuel retail business mostly still saw the government?s current policy in the fuel distribution as not so promising although prices have been set according to international prices . They are still reluctant to enter the business because the government?s policy which requires distributors to sell fuel prices at five- percent margin of the international prices is less attractive.

"The business will be profitable only if the distributors are allowed to have at least 15 percent margin," he said.

According to him, the current price formula still provides profits for Pertamina because the company has already operated its own distribution networks and refinery plants. (*)