Station Owners, Economists Dubious on Premium Quota

Jumat, 11 Maret 2011 | 14:58

Gas stations owners have decried the government’s proposed quota for subsidized fuel as unworkable, while economists claim the move may stoke inflation.
Eri Purnomohadi, chairman of the Association of Oil and Gas Entrepreneurs (Hiswana), said on Thursday that the plan was difficult to accept as vehicle owners showed few signs of switching from low-octane, subsidized Premium fuel to higher-octane, unsubsidized Pertamax.

“Premium sales in the past two months account for 95 percent of fuel sales. Pertamax is only 5 percent and it’s not showing any signs of increasing,” he said.

In a sudden announcement on Wednesday, the government said it might no longer provide extra Premium fuel beyond the monthly quota. Unlike the proposed fuel subsidy cut that would only burden drivers of private cars, the new plan would cut off all drivers, including motorcyclists, once Premium runs out at the pump.

Eri said around 190 of the 720 gas stations in Greater Jakarta only sell Premium and diesel.

“If Premium runs out in a gas station, drivers have two choices: look for another station or buy Pertamax. Either way, we cannot sell what we don’t have, so we have to deal with that,” he said.

While the state and legislators consider the way forward, fuel shortages and long lines at gas stations have been reported in Pekanbaru, Pontianak and Jambi city — remote areas that often have trouble with deliveries — raising questions over whether the government is ready to implement its plan.

State oil and gas company Pertamina played down concerns, saying it could meet demand. Spokesman Mochamad Harun said the Premium supply was secure for the next 18 days while Pertamax would for 66 more days.

“Even though Pertamina has adequate supplies, we remind the public not to panic and start buying fuel excessively,” Harun said, adding that Pertamina had lifted supply to areas with shortages.

Tubagus Haryono, head of downstream energy regulator BPHMigas, said his office had instructed Pertamina to meet Premium demand if there were no Pertamax in a given area. He also appealed to the public to buy fuel according to its needs.

David Sumual, an economist at Bank Central Asia, called the government’s new move “weird.”

“If implemented, that will cause consumers to stockpile [Premium] because of price discrepancies. If there are price discrepancies, there will be smuggling,” he said.

reporting by Ririn Radiawati Kusuma and Camelia Pasandaran

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