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Distribution of subsidized oil fuels.

Introduction

Many companies including multinational companies have shown interest in becoming a distributor of subsidized oil fuels (BBM). They proposed to take part in a tender planned by the government for the right to distribute subsidized oil fuels for 2010.

The Downstream Oil and Gas Regulator BPH Migas, however, decided later not to hold tender. Instead the agency decided to name distributors through selection and direct appointment. Distribution of subsidized oil fuels will be made by regions by companies, which are declared winners in selection in certain regions.

Despite the change in the system of selection, a number of companies especially those related to oil and gas business were still interested in taking part and submitted their biddings.

Ten of 13 companies indicating interest in the tender and taking bidding documents proceeded by submitting their bidding documents. They were PT Shell Indonesia, PT Petronas Niaga Indonesia, PT Petrobas Indonesia, PT Aneka Kimia Raya (AKR) Corporindo Tbk, PT Medco Sarana Kalibaru, PT Pertamina, PT Total Oil Indonesia, PT Patra Niaga, PT Bumi Asri Prima Pratama and PT Petro Andalan Nusantara (PAN).

Meanwhile, with the conversion of kerosene fuel into LPG, system of kerosene distribution was changed as BP Migas adopted regulation on the closed system of distribution for subsidized kerosene. The adoption of the system triggered new problem at the level of operators in the regions.

The new system forced them to set up additional distribution bases. Addition of thousands of distribution bases for subsidized kerosene is to secure distribution and prevent leaks that consumers in the A village do not have to go to the B village to buy kerosene. Each agent will have data of consumers to be served and the consumers hold card showing they are entitled to subsidy.

Distribution area for subsidized oil fuels are also to be expanded as proposed in a hearing with the Energy Commission of the House of Representatives. BPH Migas proposed expansion of Commercial Distribution Areas from four regions into 14 regions in 2010.

With the expansion, greater opportunity is open for private companies to get involved in the distribution of subsidized oil fuels. However, latest development showed that BPH Migas delayed the plan as the government has yet to revise the Presidential regulation No 71/2005 on Provision and Distribution of Certain Fuels that the options once surfacing to narrow the Commercial Distribution Region (WDN) to 14 could not possibly come to reality in 2010.

Subsidized oil fuel commodity

The government of Indonesia still provides subsidies on certain products of oil fuels (BBM) including Premium gasoline, kerosene for households and diesel oil for transport sector.

The amount of subsidy provided by the government on BBM is set at Rp556 per liter for 2010.

The types of BBM no longer subsidized include gasoline products other than premium such as Pertamax and Pertamax Plus and diesel oil and kerosene for industries

Types of BBM (oil fuels) commodities

Avgas (Aviation Gasoline)

Avgas is produced from petroleum fraction. It is designed for aviation fuel for aircraft with engines having internal combustion system, pistons with ignition system. The performance of Avgas depends on its octane number below 100 and above 100. The octane value of the type of Avgas circulating in Indonesia has a value of 100/130.

Avtur (Aviation Turbine)

Avtur is a special type of BBM produced from extraction of petroleum. Avtur is designed as fuel for aircraft having turbine engines types ((external combustion). The performance or the quality of avtur is determined by the purity of the fuel, turbine combustion model and the durability of structure at low temperature.

Gasoline

Gasoline is the general name for many types of BBM for engines with ignition system. In Indonesia, there are several types of gasoline with different ignition quality. The quality levels of gasoline are based on the value of their RON (random Octane Number). Based on the RON gasoline consists of three types:

* RON 88 or widely known as Premium (the brand of Pertamina) is a distillated type of BBM in clear yellowish color. The yellow color comes from dyestuff. This fuel is used for motor vehicle with gasoline engine such as cars, motorcycles, outboard motor, etc.

* RON 92 or known as Pertamax (a trade mark of Pertamina) is used for engines needing high octane and unleaded gasoline, especially that using technology equivalent to electronic fuel injection and catalytic converters.

* (RON 95) or Pertamax Plus (also a brand of Pertamina) meets the performance standard of. International World Wide Fuel Charter (WWFC). It is used for motor vehicles with engines needing high octane fuel and environmentally friendly. Pertamax Plus is very much recommended for vehicles having compression ratio of > 10.5 and using the technology of Electronic Fuel Injection (EFI), Variable Valve Timing Intelligent (VVTI), (VTI), Turbochargers and catalytic converters.

Kerosene

Kerosene is part of crude oil having a boiling point of between 150[degrees]C and 300[degrees]C and is colorless. It is used for years as illumination fuel, cooking fuel, water heating, etc. General it is for household uses, and small industries.

High Speed Diesel (HSD)

HSD is a type of diesel with cetane number of 45. This BBM is used generally for transport fuel of vehicles with diesel engines. Usually it is used with injection system by pump and electronic injection; it is used for fuel for transport vehicles and industrial machines.

There are also modern diesel fuel which has met the waste gas emission standard of EURO 2, having high performance with cetane number of 53 and more, having high quality with sulfuric content of below 300 ppm. This kind of BBM is recommended for diesel engines with the latest injection technology (Diesel Common Rail System), that fuel use is efficient but with high power.

Biodiesel

Biodiesel is an alternative to petroleum-based diesel fuel and is produced from renewable sources such as vegetable or animal oils. Chemically, biodiesel is fuel from a mixture of mono-alkyl ester long chain fatty acid.

The type of biodiesel sold in the market at present is a mixture of petroleum based diesel making up 95% with CPO, which has been processed into Fatty Acid Methyl Ester (FAME), making up 5%.

Diesel Oil (MDF)

Diesel oil is produced through oil distillation in black color, liquid in low temperature. Normally it has low sulfur content and could be used by Medium Speed Diesel Engine in industrial sector. Therefore, diesel oil is said Industrial Diesel Oil (IDO) or Marine Diesel Fuel (MDF).

Fuel Oil (MFO)

Fuel oil is not the product of distillation but it is a residue in black color. This type of oil has higher concentration compared with diesel oil. This cheap fuel is generally used for direct burning. Fuel oil is not far different from Marine Fuel Oil (MFO).

Volume of subsidized BBM (oil fuels) distributed

The volume of subsidized oil fuels distributed in 2009 rose 3% to 36.8 million kiloliters from 2008. The increase was contributed more by Premium gasoline which grew in volume from 16.98 million kiloliters in 2008 to 19.4 million kiloliters in 2009. Distribution of. Kerosene fell on the growing use of LPG substitute.

The government through BPH Migas proposed BBM subsidy to the House of Representatives for 2010 BBM totaling 36.50 million kiloliters, consisting of 21.54 million kiloliters of Premium, 3.80 million kiloliters of kerosene and 11.25 million kiloliters of diesel oil.

The program of converting kerosene with LPG continues progressing that the volume of subsidized kerosene proposed by the government in 2010 is reduced considerably by 34% from the subsidy for 2009

Value of BBM (oil fuels) subsidy

Subsidy on oil fuels (BBM) in 2007 shot up to Rp91 trillion from Rp55.6 trillion previously set for the revised 2007 state budget. The surge came with the soaring prices of crude oil toward the end of that year. In 2008, the subsidy on BBM continued to swell to follow the soaring prices of crude oil reaching US$ 120 per barrel, that BBM subsidy was set at Rp101.4 trillion.

The decline n the price of crude oil in the world market toward the end of 2008 and falling demand for kerosene on the use of LPG as substitute in the country resulted in a decline in BBM subsidy to Rp100.6 trillion in 2009.

Developments of BBM (oil fuels) prices

The prices of subsidized oil fuels are set by the government as apart from the fact it pays the subsidy, oil fuels concerns the interest of the people in general.

Among the subsidized types of BBM are kerosene for household and small industries, gasoline of RON 88, and diesel oil for use by small industries, transport and public services.

The retail prices of subsidized oil fuels are set based on the average price a month ahead of the reference price of Mid Oil Platts of Singapore (MOPS) plus distribution cost and 13.5 % margin.

The retail and reference prices are set on a Presidential regulation. The prices of subsidized oil fuels were last determined with Presidential regulation. Meanwhile, the prices of other types of BBM are left to be dictated by the market.

The retail price of Premium is set at Rp4,500 per liter in 2009, down from Rp5,000 in 2008--or the same as in 2007. The price of kerosene is stable at Rp2,500 per liter since 1008. The price of automotive diesel oil as was the price pf Premium rose to Rp4,800 before falling to Rp4,500 by August 2009..

Distribution Subsidized oil fuels

Distribution system

Pertamina is the main distributor of subsidized oil fuels in Indonesia and controls distribution facilities for retail sales of subsidized BBM.

Pertamina has a number of fuel filling station facilities such as Industrial fuel filling station (SPBI), Armed forces fuel filling station (SPBA) and General fuel filling station (SPBU), and has several categories of agent and other facilities to support distribution of subsidized oil fuels. The facilities include :

1. SPBI (Fuel filling stations for industry). SPBIs are owned and operated by industrial companies built with specifications set by Pertamina. Each SPBI has BBM allocation under contract with Pertamina. Under the new Law on oil and gas SPBIs are allowed to receive BBM from other suppliers.

2. SPBA (Fuel filling stations for the armed forces). SPBAs are owned and operated by the armed forces including the army, the navy, the air force and the police built with specifications set by Pertamina. The stations serve only motor vehicles of the armed force without payments.

3. PSPD (Premium Solar Packed Dealer) is fuel filling agent named by Pertamina like SPBU but without fuel filling units. PSPDs are owned and operated by private company serving vehicles on land or in waters that could not be reached by SPBU. PSPDs are given the same prices as for SPBU. Under the new law on oil and gas PSPDs are allowed to serve as agent and fuel suppliers for companies other than Pertamina.

4. Premium Diesel Oil Agents (APMS) are named by Pertamina as a private agent to serve motor vehicles on land and in waters that could not be reached by tanker trucks as the location is across river or sea. The fuel is transported from depot of Pertamina by the agent on its own cost. The agent is given a price he same as given to SPBU. Under the new law on oil and gas, an APMS is allowed to serve as agent for BBM producers other than Pertamina.

5. Rural Cooperative Units (KUD) are named by Pertamina as the distributors based on a joint decision No. 008/Kpts/DM.Migas/1984 and No. 75/Buk/IV/1984 in 1984 of the Oil and Gas Director General and Cooperatives Development Director General. They would become distributors for oil companies other than Pertamina.

6. Consumer Pool is a privately owned fuel distribution facility established by a group of fuel consumers to supply Premium gasoline especially for their own consumption. This facility was set up for areas that could not be reached by ordinary distributors.

7. Aircraft Filling Depot (DPPU) is owned and operated by Pertamina to serve aircraft using re-fueler or dispenser directly from tanker truck to aircraft.

8. AIRCRAFT FUEL DEPOT is a fuel depot owned and operated by Pertamina to serve aircraft that could not be reached by DPPU, using gasoline trucks and other containers. The airline is responsible for carrying fuel it needs from Pertamina's fuel depot.

9. KEROSENE AGENT is an agent distributing kerosene from depots of Pertamina. Kerosene is distributed through retail shops directly to the consumers.

10. SPBB (Fuel filling station for Bunker). This facility constitutes a bunker of Pertamina equipped with pipe and barges or in emergency with tanker trucks to transport fuel from Pertamina's terminals directly to bunker and then to a tanker ship.

Premium and diesel oil have almost the same distribution system. The distribution system is different for kerosene especially with the conversion into LPG.

Closed distribution system for kerosene to be stopped

The closed distribution system using control card for kerosene launched for the first time in April 2008, will likely be no longer used as the conversion from kerosene to LPG has been well in progress. Most kerosene used have chosen LPG.

According to Minister of Energy and Mineral Resources (ESDM) Purnomo Yusgiantoro, the program has to be carried out in flexible way by taking into consideration the condition in the field.

The Downstream Oil and Gas Regulator (BPH Migas) has adopted the closed distribution system for the distribution of subsidized kerosene. For that purpose census of the users of subsidized kerosene has been carried out in 63 regencies.

The application of the closed system of distribution is to better guarantee that the distribution of subsidized kerosene would be properly done.

Closed system of distribution is a distribution system for subsidized kerosene using control card, which shows the name, address and monthly kerosene share of the holder. PT Pertamina as the Public Service Obligation (PSO) based on the control card, PT Pertamina as the Public Service Obligation (PSO) agent will serve the purchase of subsidized kerosene. Pertamina, therefore will sell kerosene just to meet the consumers' need not their request.

Census was held in 2006 on 10 regencies and in 2007 to cover 63 regencies altogether including in Sumatra, Java, Kalimantan, Sulawesi, East Nusatenggara (NTT). In 2008 census continued in other regions. The censuses also show whether the kerosene consumption of 3.75 liter per person a month as has been used as a reference, is correct.

Open distribution system which has been used so far for subsidized kerosene is more liable to deviation misuse. Frequent shortage in supply with queuing buyers indicates deviations.

BPH Migas has used the control card program in the distribution of subsidized kerosene in 2009 in cooperation with PT Pertamina (Persero). In order to smoothen the implementation of the program, BPH Migas involves regional administrations.

During 2008, BPH Migas took record of the users of kerosene in 14 regencies /cities outside Java and socialized the use of the card. The regencies includes Aceh Besar, Simalungun, Tanjung Pinang, Solok, Bangka, Jambi, Tulang Bawang, Pontianak, Kepahiang, Banjarbaru, Maros, Kota Bima, Manggarai Barat and Muna.

Regencies/cities which already implemented the program earlier include Magelang, Solo, Kudus, Pemalang, Purwakarta, Subang, Karawang, Lamongan, Mojokerto, Kediri, Madiun, Yogyakarta, Bontang, Banjarbaru, Medan, Makassar, Maros, Manado and Gorontalo.

In the same year, BPH Migas named agencies in Kota Purwakata, Subang, Karawang, Bogor, Surakarta, and Sragen, and in the Lamongan district and a number of regencies in East Java.

Division of Commercial Distribution Areas (WDN)

Downstream Oil and Gas Regulatory Agency (BPH Migas) finally decided to continue using four commercial distribution areas (WDN) in selecting companies distributing and providing subsidized BBM for 2010.

A committee member of the BPH Migas Jugi Prajogio said the decision to continue using four WDNs was made as the government had not revised the Presidential regulation No. 71/2005 on Provision and Distribution of certain type of fuels. Therefore, an option to split the WDN into 14 smaller areas for 2010 could not be implemented.

Head of the BPH Migas Tubagus Haryono said BPH Migas will continue to seek the use of 14 regional distribution bases for BBM as earlier proposed.

The 14 regional bases include regional 1 in Northern coast of western part of Sumatra, regional 2 in Northern coast of eastern part of Sumatra, regional 3 in Southern part of Sumatra West Kalimantan, regional 4 in Banten, DKI Jakarta, Bodebek, regional 5 in West Java and Bodebek, regional 6 in Central Java and Yogyakarta, regional 7 in East Java, regional 8 in Central Kalimantan and South Kalimantan, regional 9 in East Kalimantan, regional 10 in Northern part of Sulawesi, regional 11 in Southern part of Sulawesi, regional 12 in Bali, West and East Nusatenggara, regional 13 in Maluku, Northern part of Papua, and regional 14 in Maluku and Southern part of Papua.

Allocation of subsidized oil fuels

Subsidized oil fuels to be distributed in 2010 will total 36.5 million KL. or down 6.26% from previously set in the revised 2009 state budget of 38.9 million KL. The subsidized oil fuels will be distributed among the provinces based on their respective quota set by the BPH Migas.

WDN 1 has at least 10 provinces to have distribution of subsidized oil fuels including Aceh to have 736,246 KL; North Sumatra to have 2.2 million KL, West Sumatra 1.07 million KL, Riau Islands 607,287 KL. mainland Riau 1.3 million KL, Jambi 689,071 KL, South Sumatra 1.1 million KL, Bengkulu 290,126 KL, Lampung 1.02 million KL and Bangka Belitung 439,235 KL.

In WDN 2. there are 7 provinces including Jakarta to have a share of 2.9 million KL, West Java 5.01 million KL, Banten 1.5 million KL, Central Java 3.4 million KL, DIY 501,698 KL, East Java 4.4 million KL, and Bali 871,644 KL.

In WDN 3, there are 14 provinces including East Kalimantan to have a share of 853,078 KL, South Kalimantan 929,558 KL, Central Kalimantan 590,409 KL, West Kalimantan 911,829 KL, North Sulawesi 561,535 KL, Gorontalo 159,024 KL, Central Sulawesi 443,917 KL, South Sulawesi 1,09 million KL, Southeast Sulawesi 345,236 KL, West Sulawesi 129,996 KL, Papua 338,29 KL, West Irian Jaya 178,511 KL, Maluku 288,896 KL and North Maluku 165,925 KL.

WDN 4 has 2 provinces NTB 655,698 KL and NTT 438,844 KL,

BBM (Oil Fuels)Distribution Facilities

Pertamina still maintains domination of oil fuels (BBM) market in the country controlling distribution facilities for retail sales. Most units of SPBU (Fuel filling station for the public) in Indonesia are operated in cooperation with Pertamina. Units of SPBU not controlled by Pertamina totaled less than 50 units in 2007 located mainly in Jakarta and nearby areas.

There are three system of SPBU management in the country--COCO (company own company operate), CODO (company own dealer operate), and DODO (dealer owned dealer operate).

** Storage Facilities

BBM storage facilities include depots, tanks and floating storage.

1. Installations/Transit Terminals/Main Depots. The facilities function to receive and store BBM from oil refineries to be transported and distributed to other depots or storage tanks or directly to the end of users. Pertamina operates 14 units of fuel installation or terminal transits, 107 depots in Indonesia including 84 sea-fed depots and 23 inland depots, 39 standard DPPU (Airport Refueling Depots) in addition to 15 pioneer DPPUs.

2. Storage Tanks. This facility is to hold BBM before being transported to consumers or units of SPBU.

3. Floating Storage. This facility is used for imported crude oil or oil products. Units of floating storage include :

a. Teluk Semangka receiving crude oil from Middle East to feed the Cilacap oil refiner.

b. Teluk Jakarta, which functions as a diesel oil supply point for Jakarta, Semarang and Surabaya and supply point of imported crude oil.

c. Pulau Sambu. This facility functions to store low sulfur waxy residue (LSWR) from the Balikpapan refinery

d. Semi Floating Storage. This is a small floating storage facility and semi permanent in Bali, Nusa Tenggara, North Sulawesi and Maluku.

Other than Pertamina, currently there are a number of other players in the BBM storage business such as PT. Petro Andalan Nusantara, PT. Redeco Petrolin Utama, PT. AKR Corporindo, PT. Patra Niaga, PT. Source Alam Utama West Kalimantan, and PT. Dover Chemical.

** BBM (Oil Fuels) Transport Facilities

The transport facilities used for BBM from oil refineries are:

1. Tankers : ships operated by Pertamina. The tankers are owned or chartered by Pertamina.

2. Tanker trucks, used for the transport of BBM from one depot to the other depots of Pertamina and then to units of SPBU, SPBI, SPBA, APMS, DPPU, kerosene agents, KUDs, bunkers and other distribution facilities serving the consumers directly. The tanker trucks are owned either by Pertamina or by the operators of SPBU, SPBI, SPBA, etc. Transport of aviation fuels is generally handled by three parties excepting for DPPU, which uses the facility of Pertamina.

3. BARGES are used in areas where river transport is more commonly used. Barges are generally operated and operated by private companies. Currently there are 12 units of barge with a total capacity of 35,508 DWT.

4. RAIL TANK WAGONs are transport facility used in Java, North Sumatra and South Sumatra where there are railway transport facilities. The facility is owned and operated by PT Kereta Api Indonesia (PT KAI) on contract with Pertamina, which is responsible for the distribution of fuels. There are 991 units of tanker wagons operated by PT KAI, 694 units of which are owned by PT KAI, and the rest or 297 units are owned by Pertamina.

5. Fuel Transports System with pipes. In some areas BBM is distributed through pipelines. Currently this system is used in some areas such as :

a. From the Cilacap refinery to Tasikmalaya, Ujung Berung and to depots in Padalarang in West Java.

b. From the Cilacap refinery to Maos and to depot of Rewulu in Central Java.

c. From the Pangkalan Brandan refinery to Pangkalan Brandan in North Sumatra.

d. From the Balikpapan refinery to depots in Balikpapan in East Kalimantan.

e. From the Dumai refinery to depot in Dumai in Riau.

Other than Pertamina currently there are 23 other players operating in BBM transport business in Indonesia.

Pertamina remains the main player in BBM (oil fuels) distribution

After four years of seeking to liberalize the business in the distribution of subsidized oil fuels, the government of Indonesia chose to adopt the oligopoly market structure as it does not want to go too far in liberalizing the system that could hurt PT Pertamina as well as the interest of people in general.

Based on the Oil and Gas Law, allowing any company to carry out the public service obligation (PSO) in the distribution of subsidized oil fuels, should come into effect 23 November 2005, to coincide with the termination of the PSO of PT Pertamina.

The government is not yet ready to fully implement the law especially concerning the technical regulations, therefore, the PSO was adopted only on 1 January, 2006. After the PSO with a new system was adopted, there was no company other than Pertamina ready with the required infrastructure. Pertamina, therefore, remains the only one assuming the BBM PSO until 2009.

The Downstream Oil and Gas Regulatory Agency (BPH Migas) said it is possible for other companies to take limited part in the distribution of subsidized oil fuels starting 2010 but the priority is still for Pertamina.

In addition any companies involved in the distribution of subsidized oil fuels must be in cooperation with Pertamina to guarantee that the state company will maintain the position as the main player.

The government does not want the market of subsidized oil fuels is liberalized into a competitive market. Under the oligopoly market structure, Pertamina is expected to control up to 80% of the market.

* Marketing Units (UPMS) of Pertamina

Competition in SPBU (gas stations) business sharper

Pertamina is seeking to continue to improve its services to meet sharper competition in the business of operating public fuel filling stations (SPBU). Currently there are 4,300 units of SPBU, but only 687 units already secure the Pasti Pas (precision guaranteed) certificate

Pertamina has set a target that 1,000 units of its SPBU will secure the certificate by the end of 2009 and in 2010, its entire SPBU units are to have the certificate.

Later Pertamina will put in ranks all SPBU having the certificate based on their performance, all entitled to incentive depending on their ranks, which include categories of Silver and Gold.. The margin for those not yet up to standard is Rp180 per liter and ones in Silver category to have an incentive of Rp200 per liter. If they could maintain the rank for three months the margin will be increased by Rp5--Rp30 per liter and if they could maintain the good service for a year they would win the rank of Gold category and if it goes for another year the rank will be promoted to Diamond

PT Shell Indonesia has also continued to open new SPBU. Its Vice President Wally Saleh said the increase in number is to meet growing demand for the service in the future. Shell plans to open one or two more units in Jakarta. Currently Shell has 20 units of SPBU in Jakarta.

Petronas, through PT Petronas Niaga Indonesia plans to build more than 400 units of SPBU until 2011. The new units will be built in Java, Sumatra and Kalimantan. In the period of 2005-2006, Petronas built 5 units of SPBU, and in 2006-2007, it had 30 more units unit SPBU. In 2007-2008 it build again 65 units and in 2008-2009, there were 10 more units. In 2009-2010 it plans to have 147 new units of SPBU and 200 units in 2010-2011.

Meanwhile, PT Total Oil Indonesie also has target to build five units of SPBU by the end of 2009. The five units will be opened in Jakarta, Depok, Bogor, Tangerang, and Bekasi. A company official Rulianti Syahrul said currently Total has two units of SPBU in Jakarta. PT Total Indonesia is the owner but the operator is its partner.

The SPBU of Total sell only non-subsidized BBM. The types of its BBM are one with octane 92 the class of Pertamax (Performance 92), gasoline with octane 95, the class of PertamaxPlus (Performance 95) and diesel oil the class of Pertamina Dex (Performance Diesel).

Performance 92 is sold at a price of Rp 5,900 per liter, Performance 95 at Rp 6,500, and Performance Diesel Rp 6,900. The prices are more or less the same as those put up by Pertamina and Shell.

Prospects of business in BBM (oil fuels) distribution

The prospects of business in the distribution of subsidized oil fuels are encouraging with fast growing demand. The oligopoly systems opens greater opportunity for non Pertamina companies to get a share in the profitable business. Non Pertamina distributors are allowed to operate only in certain regions, but they are required to have the capacity to handle distribution in at least two WDNs.

With limited distribution facilities, however, it would be difficult for other companies to challenge the domination by Pertamina in the near future. Pertamina already has all the facilities needed almost in all parts of the country.

The condition may soon change with plan to split the 4 WDNs into 14 allowing more non Pertamina companies to operate in the business with smaller coverage of distribution system compared with the networks required in only four WDNs.

Shell and Petronas are potential competitors for Pertamina as they have continued to expand their networks of SPBU in Indonesia.

Conclusion

The government of Indonesia has scrapped the monopoly system in the distribution of subsidized oil fuels in a bid to create a healthy market competition, which is expected to lead to greater efficiency n the business sector.

The government, however, is set to keep Pertamina as he dominating player to better guarantee supply of the vital requirement of the people. Control by the government is still needed to secure supply in all regions.

Although the government has not fully liberalize the market of subsidized oil fuels, the private companies still see opportunity in the business especially in storage, transport and retail sales.

Strong interest has been shown by foreign investors such as Shell, Petronas and Total Indonesie, which have invested much especially in the development of SPBU units and distribution facilities.
Table--1
Volume of subsidized BBM (oil fuels), 2008-2010

Types of BBM 2008 2009

Premium 16.98 million kiloliters 19.4 million kiloliters
Kerosene 7.56 million kiloliters 5.8 million kiloliters
Diesel oil 11 million kiloliters 11.6 million kiloliters
Total 35.54 million kiloliters 36.8 million kiloliters

Types of BBM 2010 *

Premium 21.45 million kiloliters
Kerosene 3.80 million kiloliters
Diesel oil 11.25 million kiloliters
Total 36.50 million kiloliters

Source : BPH Migas

*) Proposed by the government

Table--2
Cost of BBM (oil fuels) subsidy, 2007-2009

Subsidy 2007 2008 2009

Value (Rp trillion) 91 101,4 100,6

Source : BPH Migas, Pertamina

Table--3
BBM (oil fuels) Price Developments, 2009

 Diesel/Bio
Date Premium Kerosene diesel Diesel

15 Feb Retail 4,500 2,500 4,500 --
 (Rp/Lt)

REGION. 1

 Customer 4,913,500 5,681,800 4,421,200 4,292,000
 (Rp/KL)

 Bunker 425.36 491.90 382.76 371.58
 (US$/KL)

REGION. 2

 Customer 5,011,700 5,802,000 4,705,500 4,603,900
 (Rp/KL)

 Bunker 433.87 502.31 407.72 398.59
 (US$/KL)

REGION. 3

 Customer 5,129,600 5,947,200 4,825,000 4,716,700
 (Rp/KL)

15 Jan Bunker 444.07 514.88 417.72 408.35
Feb (US$/KL)

REGION. 4

 Customer 4,913,500 5,681,800 4,383,000 4,292,000
 (Rp/KL)

 Bunker 425.,36 491.,90 379.,46 371.,98
 (US$/KL)

 Diesel Perta-
Date V10 Fuel oil mina Dex Description

15 Feb Retail -- -- -- Subsidized
 (Rp/Lt) price Reg.
 of EMDN.
 minister
 No, 16 in
 2008)

REGION. 1

 Customer 4,045,000 3,578,400 4,804,000 Selling
 (Rp/KL) price
 Economic
 value (Non
 Subsidy)

 Bunker 350.20 309.83 415.95 Selling
 (US$/KL) price
 Economic
 value (Non
 Subsidy)

REGION. 2

 Customer -- 3,727,500 -- Selling
 (Rp/KL) price
 Economic
 value (Non
 Subsidy)

 Bunker -- 322.74 -- Selling
 (US$/KL) price
 Economic
 value (Non
 Subsidy)

REGION. 3

 Customer -- 3,802,000 -- Selling
 (Rp/KL) price
 Economic
 value (Non
 Subsidy)

15 Jan Bunker -- 329.19 -- Selling
Feb (US$/KL) price
 Economic
 value (Non
 Subsidy)

REGION. 4

 Customer 4,045,000 3,578,400 4,804,000 Selling
 (Rp/KL) price
 Economic
 value (Non
 Subsidy)

 Bunker 350.,20 309.,83
 (US$/KL)

Table - 4

Commercial distribution areas for BBM (oil fuels)

WDN I WDN II WDN III WDN IV

Nanggroe Aceh Darussalam Banten West Kalimantan
North Sumatra DKI Jakarta South Kalimantan NTB
West Sumatra West Java East Kalimantan NTT
Riau Central Java Central Kalimantan
Riau Islands Yogyakarta West Sulawesi
Jambi East Java South Sulawesi
Bengkulu Bali Central Sulawesi
South Sumatra Southeast Sulawesi
Bangka Belitung North Sulawesi
Lampung Gorontalo
 Maluku
 North Maluku
 West Irian Jaya
 Papua

Source: BPH Migas

Table - 5
Plan 14 of Regional Bases of BBM (oil fuels) Distribution

Regional
basis Regions

1 Northern coast of western part of Sumatra
2 Northern coast of eastern part of Sumatra
3 Southern Sumatra, West Kalimantan
4 Banten, DKI Jakarta, Bogor, Depok, Bekasi
5 West Java and Bogor, Depok, Bekasi
6 Central Java and DI Yogyakarta
7 East Java
8 Central Kalimantan and South Kalimantan
9 East Kalimantan
10 Northern part of Sulawesi
11 Southern part of Sulawesi
12 Bali, West and East Nusatenggara
13 Maluku and northern part of Papua
14 Maluku and southern part of Papua

Source: BPH Migas

Table - 6
Allocation of subsidized oil fuels, 2009 - 2010

WDN I

No. Provinces Allocation of quota

 2009 2010 *

1 Aceh 761.564 KL 736.246 KL
2 North Sumatra 2,630,825 KL 2.000.000 KL
3 West Sumatra 906,400 KL 1.070.000 KL
4 Riau Islands 516,376 KL 607.287 KL
5 Riau mainland 1,377,055 KL 1.300.000 KL
6 Jambi 594,085 KL 689.071 KL
7 Bengkulu 242,235 KL 290.126 KL
8 South Sumatra 1,106,520 KL 1.100.000 KL
9 Lampung 1,136,648 KL 1.020.000 KL
10 Bangka Belitung 390,686 KL 439.235 KL

WDN II

No. Provinces Volume

 2009 2010 *

1 DKI Jakarta 2,917,190 KL 2.900.000 KL
2 West Java 5,099,746 KL 5.010.000 KL
3 Banten 1,649, 662 KL 1.500.000 KL
4 Central Java 3,961,131 KL 3.400.000 KL
5 Jogjakarta 483,641 KL 501.698 KL
6 East Java 5,300,28 KL 4.400.000 KL
7 Bali 863,746 KL 871.644 KL

WDN III

No. Provinces Volume

 2009 2010 *

1 East Kalimantan 895,368 KL 853.078 KL
2 South Kalimantan 750,637 KL 929.558 KL
3 Central Kalimantan 467,237 KL 590.409 KL
4 West Kalimantan 715,889 KL 911.829 KL
5 South Sulawesi 1,142,582 KL 1.090.000 KL
6 Southeast Sulawesi 273,234 KL 345.236 KL
7 Central Sulawesi 358,840 KL 443.917 KL
8 North Sulawesi 445,579 KL 561.535 KL
9 Gorontalo 127,008 KL 159.535 KL
10 West Sulawesi 101,897 KL 129.996 KL
11 Papua 272,835 KL 338.129 KL
12 West Irian Jaya 144,634 KL 178.511 KL
13 Maluku 221,232 KL 288.896 KL
14 North Maluku 124,312 KL 165.925 KL

WDN IV
 2009 2010 *

1 West Nusa Tenggara 526,367 KL 655.698 KL
2 East Nusa Tenggara 349,100 KL 438.844 KL

*) Proposal by the government (BPH Migas)

Source: BPH Migas

Table - 7
Companies having BBM (oil fuels) storage facilities

Companies Location

Pertamina
PT. Petro Andalan Nusantara Kuala Tanjung, Sumut, Belitung, and Riau
PT. Redeco Petrolin Utama, Merak--Banten
PT. AKR Corporindo Surabaya, Ciwandan--Serang--Banten
PT. Patra Niaga Kabil--Batam
PT. Source Alam Utama West Ketapang--West Kalimantan
 Kalimantan
 and PT. Dover Chemical Cilegon--Banten

Source: Data Consult

Table - 8
BBM (oil fuels) transport companies in Indonesia

Companies License Facility

PT. Cenderawasih Bumi Transport of BBM Tanker trucks
 Putera
PT. Aneka Kimia Raya Transport of BBM Na
 Corporindo
PT. Nusaraya Putramandiri Transport of BBM Na
PT. Harapan Abadi Transport of BBM Tankers and LCT
PT. Samudra Etam Energi Transport of BBM Tankers
PT. Caraka Tirta Pratama Transport of BBM Fleets of tugboat,
 tankers, barges
PT. Kurnia Sakti Wibawa Transport of BBM Tanker trucks
PT. Global Trans Transport of BBM Tankers
 Energy International
PT. Dayanda Bersama Transport of BBM Tanker trucks and
 Motor-ships
PT. Surya Artha Chanya Transport of BBM Tanker trucks
PT. Adovelin Raharja Transport of BBM armada Tugboat,
 Barges & Tankers
PT. Lumako Abadi Transport of BBM Tanker trucks
 Sejahtera
PT. Sarana Sindu Setia Transport of BBM Motor-ships
PT. Sabda Daiya Anda Transport of BBM Motor-ships
PT. Angkutan Samudera Transport of BBM Motor-ships
 Mentawai Indah
PT. Simeulue Transport of BBM Na
PT. Pelayaran Siberut Transport of BBM Motor-ships
 Jaya
PT. Antar Nusa Padang Transport of BBM Motor-ships
 Prim Kopelra Transport of BBM Motor-ships
PT. Spectra Samudra Line Transport of BBM Fleets of barges
 and tankers
PT. Duta Bahari Menara Transport of BBM Fleets of and LCT
 Line
PT. Sumatera Sarana Transport of BBM Tanker trucks
 Sekar Sakti
PT. Ekatama Raya Transport of BBM Tanker trucks
PT. PERTAMINA Transport of BBM

Companies Areas

PT. Cenderawasih Bumi DKI Jakarta, Banten
 Putera and West Java
PT. Aneka Kimia Raya DKI Jakarta and
 Corporindo Surabaya.
 Expansion:
 Medan, Palembang,
 Lampung, Banten and
 Semarang
PT. Nusaraya Putramandiri DKI Jakarta, Banten,
 West Java, Yogyakarta
 and Semarang
PT. Harapan Abadi Bontang--East
 Kalimantan
PT. Samudra Etam Energi East Kalimantan
PT. Caraka Tirta Pratama Java, Sumatra,
 Sulawesi
PT. Kurnia Sakti Wibawa DKI. Jakarta, Banten,
 West Java, Central
 Java, and East Java
PT. Global Trans Islands of Java,
 Energy International Kalimantan and
 Sulawesi
PT. Dayanda Bersama Central Kalimantan,
 South Kalimantan
 and Sulawesi
PT. Surya Artha Chanya Jakarta, Banten and
 West Java
PT. Adovelin Raharja Java, Sumatra
 Kalimantan, Sulawesi
PT. Lumako Abadi Sumatra
 Sejahtera
PT. Sarana Sindu Setia West Sumatra
PT. Sabda Daiya Anda West Sumatra
PT. Angkutan Samudera West Sumatra
 Mentawai Indah
PT. Simeulue West Sumatra
PT. Pelayaran Siberut West Sumatra
 Jaya
PT. Antar Nusa Padang West Sumatra
 Prim Kopelra West Sumatra
PT. Spectra Samudra Line Indonesian waters
PT. Duta Bahari Menara Kalimantan
 Line
PT. Sumatera Sarana Sumatra
 Sekar Sakti
PT. Ekatama Raya DKI Jakarta, West
 Java, Banten
PT. PERTAMINA

Source: Ministry of ESDM, Data Consult

Table - 9
Marketing Areas of Pertamina per province by marketing units

 Province
Marketing Units (Marketing areas)

UPMS I (Medan) Aceh, North Sumatra, West Sumatra, and Riau

UPMS II Jambi, Bengkulu, Bangka-Belitung, South Sumatra
(Palembang) and Lampung.

UPMS III (Jakarta) DKI Jakarta, Bandung and West Java

UPMS IV Central Java and Yogyakarta
(Semarang)

UPMS V (Surabaya) East Java, Bali, NTB and NTT

UPMS VI East Kalimantan, South Kalimantan, Central
(Balikpapan) Kalimantan and West Kalimantan

UPMS VII South Sulawesi, Sulawesi, Central Sulawesi,
(Makassar) Gorontalo and South Sulawesi

UPMS VIII Papua, West Papua, South Maluku and North
(Jayapura) Maluku

Source: Pertamina

Table - 10
Number of SPBU (gas stations) units in Indonesia 2009

 Number of SPBU
Companies units

PT Pertamina 4.300
PT Shell Indonesia 36
PT Petronas Niaga Indonesia 20
PT Total Indonesia 2

Source: Pertamina, Shell, Petronas, Total
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Title Annotation:TRADE
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Jul 1, 2009
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