PT Pertamina
[Persero] finally normalized supply of premium and solar oil. This BUMN oil
distributor company eased distribution restriction to prevent long queue in some
gas stations.
Pertamina took the measures after
having directives from the Government. Pertamina had been observing the
development in the market in a few days. Normalization of supply had been
executed since Tuesday last [26/8] to normalize situation so there would be no
more axing of supply, for premium or solar.
Still pipelining of oil would be
done the measured and focused way according to local conditions. Pertamina’s
data had it that the average solar distribution in all of Indonesia came to 43,047
KL per day while the average distribution of premium oil was posted at 80,155
KL per day.
Previously Pertamina axed pipelining
of Premium to some gas stations from the previous 24 thousand liter per year to
be only 8 thousand liters per day. The policy was meant to save pipelining of
subsidized oil and the portion for it was based in APBN-P 2014 from 48 million
to become 46 million KL.
In spite of relaxing policy,
Pertamina stayed to be an the alert of any possibility of quota restriction
might cause to exceed quota in APBNB-P State Budget 2014. In fact quota was the
basic of calculation in controlling distribution.
The Ministry of Energy and Mineral
Resources Jero Wacik stated that long queue at gas stations was the consequences
of limited supply of subsidized oil. He pled the public, especially of the
upper middle class, to buy non subsidized oil for their private cars.
About the recommendations that the
Government increases oil price, the Ministry was quite upset. As known he had
proposed oil price to be increased, but his proposal was objected by some
fraction in Parliament who would be the ruling party in the next Government.
So far there had been no plan to
increase price of subsidized oil because the Government was still waiting for
the outcome of meeting between SBY the ruling President and Jokowi the elected
President on 278.
The Ministry of Finance believed
that restricted distribution of subsidized oil was necessary. The reason was
that oil restriction would not have any impact on inflation significantly.
Inflation might occur on small scale in fuel commodity; such was because
consumers who were accustomed to use Premium oil at Rp6,500 per liter would
have to spend more money of buying Pertamax, but the contribution to total
inflation was small.
From past experience lesson was
leaned that inflation only occurred if the Government increased price of
subsidized oil, such as in June 2013 when the Government increased price of
Premium oil from Rp 4,500 per liter to Rp6,500 per liter and solar from Rp 4,500
per liter to Rp 5,500 per liter, inflation soared up in July and August; but
the reaction was only momentary.
As oil distributor, Pertamina had to
make sure that quota for Premium and Solar oil was in accordance with Law No.
12/2014 on amendement of APBN 2014 so quota of 46 million kiloliter had to be
kept from exceeding quota till end of the year.
Under such circumstances there were
only 2 options to choose from: Firstly, to pipeline subsidized oil normally on
condition that oil quota must run out before year end, i.e. mid November for
solar oil and mid December for Premium oil. Furthermore consumers must buy non
subsidized oil till of year. Secondly, to regulate volume of distribution each day
till end year.
Technically Pertamina regulated
distribution of subsidized oil evenly based allocation for each gas station and
other appointed distributors as per August 18 2014 last. To ensure oil
Pertamax, Pertamax plus, Pertamax Dex and non subsidized solar.
Only trouble was that the two
options were dilemmatic afield. Evidently small business circles were affected
by restriction on subsidized oil. They claimed that increase of subsidized oil
price would increase operational cost. At the moment they were in wait-and-see
position although increase of production cost was just before them.
Their reserved attitude of not
increasing product price as impact of the restriction rule might not last long
if the condition increased operational cost. The effect could boost inflation.
They were expecting that the Government could increase quota for subsidized iol
for the public.
Apparently the impact of quota restriction
was already felt in some regions. An example was a gas station in Padang
Sidempuan, North Sumatra on Wednesday August 27, 2014 past. Although the gas
station was only to open early morning, hundreds of cars waited on a long queue
line just to get their share of fuel. The effect was that was that hundreds of
cars were trapped in a jam at Imam Bonjols street for 2 kilometers long.
To troubleshoot fuel scarcity
problem, the gas station at Indra Angkola restricted buying of fuel for public
transportation, trucks, and private cars. For big vehicles, maximum permitted
buying was Rp 400 thousand, while private cars and public transportation were
only allowed to buy not more than Rp 200 thousand of gas.
Meanwhile scarcity of fuel in
Jember, East Java, caused hundreds of inter-city and inter-provincial buses to
stop operating. Apparently the bus departures in Tawang Alun terminal, Jember
was empty as passengers changed to train. At that time only short distance
connections like Jember-Probolinggo and Jember-Banyuwangi were operating. Some
drivers decided not to operate their buses. If they had 100 liters of fuel, it
was only enough for one single journey, even that had to be obtained after 7
hours of waiting. The reset choosed to park their cars in terminals. Data
showed that at Tawang Alu terminal there were 222 buses operating, at the
moment there was only 1 armada consisting of 90 buses.
The tragic thing was that at gas
station in Panji, Situbondo one motor cycle rider collapsed after waiting in
the long line. He collapsed under the blazing sun when trying to buy Pertamax
type oil.
Ever since restriction of oil quota
was applied, long queue of vehicles waited at gas stations along the Pantura
coastline. Car and Motorcar drivers waited for hours to get subsidized fuel,
especially Premium. Some had their patience to wait, ending in failure to get
subsidized oil at Rp6,500 per liter and then they had to buy from the
blackmarket or buy Pertamax at Rp11,300 per liter.
Pertamina argued that the queue was
not caused by scarcity of oil but because of restrictions in distributing
subsidized oil not to exceed quota till end year. Queue was more caused by
anxiety or fear that the would not get fuel.
The long queue could be regarded as
serious or not serious. If the chaos was not immediately managed, it might
trigger chain effect to other sectors: soaring prices of gods, blackmarketing,
smuggling and other social problems. If fact all the confusion was the chronic
effect of energy policy, especially oil subsidy which was never firm. The
Government seem to stay away from being unpopular.
So the Government just had to be
firm. It was important to realize that the public had become importer of oil
which certainly burdened the budget. Subsidy could not be maintained because it
was definitely off-target. The realistic solution was to increase price of oil
based on cost accounting formula, accompanied by facilitating mass public
transportation to avoid private cars. The public, except the poort, must not be
buoyed by subsidy.
The only thing was that the
Government must be consistent about using fund from austerity plan for programs
really beneficial to the public. Other things noteworthy was development of
alternative energy for fuel. The Government needed have to have a good roadmap
to develop non fossil energy. (SS)
Business News - September 3, 2014
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