US uses WTO to open Indonesia?s oil retail market
Friday, August 8 2003 - 02:52 AM WIB
?Some countries including the United States, Norway have filed their complaint at WTO to liberalize the country?s downstream oil industry,? Gusmardi was quoted by Koran Tempo in its Friday edition.
Commenting on this issue, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that Indonesia had theoretically liberalized its oil downstream industry including the oil retail market with the introduction of the oil and gas law two years ago.
?The problem is that Indonesia still subsidizes the fuel prices. If the subsidy is not lifted no investors will be attracted to enter the oil downstream industry,? he was quoted as saying. Although the subsidy in the sales of fuel has been significantly reduced within the past two years, the sector remains unattractive.
The fuel prices in Indonesia are now about 85 percent of the international price levels. It means that the government still subsidizes about 15 percent.
Besides the subsidy, the dominance of Pertamina both in the processing of oil and the retail market would also pose a major barrier for the new comers to enter the local oil retail market.
Pertamina, which should abandon its exclusive rights in the oil downstream industry to comply with the new law, remains the only player. Its extensive distribution networks and dominance in the refinery industry will enable Pertamina to continue its leadership in this sector.
The government?s new regulatory body in charge of oil downstream activities, BP Migas, said that it was still formulating a new policy to open up the country?s oil downstream industry to new players.
The policy will, among others, pave the way for new investors to use Pertamina?s low-capacity processing facilities. Under this business cooperation, Pertamina will receive fee, he added. (*)