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NEWS UPDATES Asean Affairs   13  December 2010

Pertamina against the wall on auto fuel

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With less than three weeks left until 2011, many are unconvinced of the government's readiness for the consequences of its plan to stop subsidized fuel for private vehicle owners.

If the government pushes ahead with its plan, the details of which are still under debate in the House of Representatives, state oil and gas company Pertamina may have no option but to import high octane fuel to meet the sudden increase in demand.

Komaidi, director of energy research organization Reforminer, told Antara that imports would be imperative as Pertamina's production of nonsubsidized fuel Pertamax was only 200,000 kiloliters per day, far from enough to cover the expected demand.

"The limitation of subsidized fuel oil use would force most motorists to switch from Premium to the unsubsidized fuel oil type, Pertamax, and demand for this fuel would automatically soar to an as yet unknown level," Komaidi said.

The government plans to cut fuel subsidies by prohibiting private vehicle owners in Greater Jakarta from using Premium, the subsidized fuel, beginning on Jan. 1. If approved by the House, the plan would cover all of Java and Bali by July.

However, Komaidi said the infrastructure needed to support the government's plan was not sufficient. Of the 600 gas stations in Greater Jakarta, only about two-thirds were prepared to sell Pertamax. About 35 percent of the 2,800 gas stations across Java and Bali were ready.

In order to carry out its plan, the government needs to equip most of the gas stations with Pertamax dispensers. Based on predictions from the downstream oil and gas regulating agency BPH Migas, the government would need about six months to one year to build dispenser infrastructure at 200 gas stations in Jakarta to enable them to sell Pertamax.

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