Premium Fuel Supply Increased to 11.8 Million Kiloliters

ANTARA FOTO/OKY LUKMANSYAH

Fuel taskforce officers prepare barrels of fuel on their motorcycles at a kiosk of state oil and gas company Pertamina in Kertasari rest area, Tegal regency, Central Java, on Saturday (2/6/2018). To anticipate the scarcity of fuel, PT Pertamina prepared 12 million liters of fuel, among them 2 million liters of premium gasoline, during Lebaran homebound travels and their influx back to big cities in Java.

JAKARTA, KOMPAS – The allocation for the low-octane gasoline Premium for state-owned oil and gas company Pertamina to distribute this year has been increased by 4.3 million kiloliters to 11.8 million kiloliters from the initial plan of 7.5 million kiloliters.

The increased fuel allocation is part of the revision to Presidential Regulation No. 191/2014 on the supply, distribution and retail price of fuel. The government previously proposed to stop the distribution of the RON 88 gasoline.

Under Presidential Regulation No. 191/2014, Pertamina was required to supply and sell the cheap Premium gasoline in all regions of Indonesia except Java and Bali. Earlier this year, the government received reports of a Premium supply shortage in several areas. Based on the report, the Energy and Mineral Resources Ministry proposed that Presidential Regulation No. 191/2014 be revised to also require Pertamina to distribute and sell Premium gasoline in Java and Bali.

According to the Downstream Oil and Gas Regulatory Agency (BPH Migas), the revision to Presidential Regulation No. 191/2014 is stipulated in Presidential Regulation No. 43/2018.

Along with the revision, Energy and Mineral Resources Minister Ignasius Jonan issued Ministerial Decree No. 1851 K/15/MEM/2018, which primarily instructs Pertamina to distribute and sell Premium fuel in all provinces, including Java and Bali. The supply allocation also was also increased from 7.5 million kiloliters to 11.8 million kiloliters.

"The supply allocation (of 11.8 million kiloliters) is for a one-year period starting from January 1, 2018, for all areas in Indonesia," BPH Migas head Fanshurullah Asa said on Sunday when contacted in Jakarta.

Fanshurullah said that according to BPH Migas\'s data, Premium fuel will be sold in Java and Bali through 2,090 distributors, comprising 1,519 existing distributors and 571 new distributors.

BPH Migas also instructed Pertamina to ensure the availability of Premium gasoline in a number of locations such as toll roads, public transportation routes and industry centers that may need a Premium supply.

The increased volume of Premium allocation will further hurt Pertamina\'s finances. Pertamina finance director Arief Budiman said the ideal selling price for Premium gasoline was Rp 7,150 per liter. At present, Premium fuel was being sold for lower at Rp 6,450 per litter, and Petamina must cover the difference.

Not suitable

The chairman of the Committee for the Elimination of Leaded Gasoline (KPBB), Ahmad Safruddin, said Premium gasoline was no longer suitable for the engines of new vehicles.

According to him, the sulfur content in the Premium gasoline was relatively high at 200 parts per million (ppm), whereas the latest engine models had a maximum sulfur limit of 50 ppm.

"In addition, the government’s policy related to the elimination of the Premium gasoline is becoming increasingly unclear. According to the policy connected to Euro 4 emissions, which was adopted in 2017, the highest sulfur content is 50 ppm, or equivalent to RON 92 gasoline (Pertamax)," said Ahmad.

At a press conference earlier, Pertamina\'s director of logistics, supply chain and infrastructure, Gandhi Sriwidodo, said that Pertamina was committed to providing Premium supplies in line with the government appointment. They would gradually prepare for the public distribution of Premium. According to him, public gasoline filling stations (SPBU), which previously did not sell Premium, would need time to prepare to sell Premium gasoline.

"Technically, for example, SPBUs are generally equipped with tanks for three types of fuels: Pertamax, Pertalite and diesel fuel. As they don’t have an extra tank for Premium, a process will be take to change an existing tank into a Premium tank. The tank must be drained first and the settings must also be adjusted. The most important thing is that we are ready to meet the need for Premium," Gandhi added.

The market share of Premium gasoline has recently been taken over by Pertalite, a brand of RON 90 gasoline. During the first quarter of 2018, forecasts for the Pertalite market share were 57 percent. In the same period, the Premium market share was only 27 percent. The RON 92 Pertamax and another gasoline with more than RON 92 made up the remaining market share.

At the beginning of the Joko Widodo-Jusuf Kalla government in January 2015, the Oil and Gas Governance Reform Team established by then-energy minister Sudirman Said had recommended that Premium distribution be eliminated in Indonesia.

Pertamina approved the recommendation, and was given two years to prepare to switch from Premium gasoline to Pertamax.

(APO)