Royal Dutch Shell Plc  .com Rotating Header Image

The Jakarta Post: When Pertamina no longer holds monopoly

A. Hamzah, Contributor, Jakarta

“Pertamina calls on you to become a Pertamina gas station owner as a token of participation in national development.”

You may be puzzled by this call, which can be found on Pertamina’s website. Why does an oil company of Pertamina’s class link the retail gasoline business with nationalism when the government has given its blessing to the operation of foreign gas stations in Indonesia? Does it mean that in Pertamina’s view the government lacks nationalism?

Like it or not, competition in the gasoline retail business in Indonesia has intensified following last November’s termination of over 30 years of Pertamina’s monopoly over oil distribution. In Jakarta, in particular, Shell Indonesia, a subsidiary of oil giant Royal Dutch Shell Plc., became the first foreign company to retail gasoline in Indonesia.

Shell, which started with only one gas station in upmarket Lippo Karawaci, Tangerang, now runs four such stations. This oil company, which has seashells as its logogram, has introduced a concept of a gas station in a modern design, coupled with free air for your tires, free cleaning of your car’s windows and windshields and free filling of radiator liquid.

For the time being, Shell markets only two brands of high-octane gasoline of the class of Pertamina’s Pertamax and Pertamax Plus. Its Super and Super Extra gasoline are sold at Rp 5,450 and Rp 5,850 per liter respectively, while Pertamina now sells its Pertamax and Pertamax Plus at Rp 5,350 and Rp 5,550 per liter respectively.

In addition, each Shell gasoline station has a mini market, which sells various products, ranging from lubricants to snacks and cold drinks. Motorists can enjoy all these products and extra services, Fathia Syarif, Shell spokesperson, said recently.

Besides Shell, another company, PT Petronas Niaga Indonesia, a subsidiary of Malaysia’s Petroleum Nasional Bhd oil company, has also been issued a permit for the construction of 200 gas stations, to be built at an investment of US$200 million. At present, investing Rp 10 billion, this company operates a gas station in Cibubur, Jakarta. Within the gas station compound, you can also find a Kentucky Fried Chicken outlet, an ATM and a mini market.

Like Shell, Petronas sells only “green” gasoline, Primax 95 and Primax 92, at Rp 5,600 and Rp 5,400 per liter respectively. Petronas has reached its target of selling 14,000 liters of gasoline a day, said president director of PT Petronas Niaga Indonesia, Kamarulzaman M. Hashim.

Today, most motorists still go Pertamina gas stations because the gas stations selling Shell and Petronas fuel are still few in number and Pertamina provides the types of fuel subsidized by the government. Pertamina sells subsidized Premium gasoline at Rp 4,500 per liter and subsidized diesel at Rp 4,300.

Petronas and Shell have called on the government to allow them to also sell both types of subsidized fuel. Once the government allows them to sell the fuels, both firms will pose a greater challenge to Pertamina’s domination in the country’s fuel market.

Indonesia, with a population of some 220 million people, is indeed an alluring market. In addition, statistically, there is a constant increase in the number of motorized vehicles every year. As for motorcycles alone, some four million motorcycles are imported every year and the import growth stands at an average of 10 percent annually. As a whole, motorized vehicles use up almost half of the national consumption of oil, which is recorded at 60 million kiloliters a year.

Given such an attractive market, it comes as no surprise that there are many parties interested in retailing gasoline here. So far, almost 180 companies, including oil giants like Caltex, Chevron, both of the U.S., British firm BP and France’s Total, have expressed interest in being involved in the oil distribution business.

Pertamina has anticipated this competition and reacted by, among other things, intensifying the construction of new gas stations. Recently, the company broadened public access to becoming a Pertamina partner by providing a registration facility through the Internet.

While in the past investors had to wait many months for a response from Pertamina to their application to be a partner in distributing fuel, Pertamina promises to respond to applications within a week at the most.

“Pertamina has and will continue to upgrade the quality of its gas stations to make them more competitive by improving their displays, providing world-class products at competitive prices, improving their service, expanding to strategic locations and campaigning to boost the public’s love of domestic products,” Pertamina’s fuel marketing division head Djaelani Sutomo said.

To strengthen its market position domestically, Pertamina has also increased the number of its international-standard gas stations, or those known as Company Owned and Company Operated (COCO) gas stations. Currently, Pertamina operates 24 COCO gas stations, all of which are situated in strategic locations in major cities. At every COCO gas station, Pertamina provides additional facilities such as a mini market or convenience store. The company plans to establish 200 more COCO gas stations in the next five years.

Currently, Pertamina operates about 3,000 gas stations along with its partners throughout Indonesia.

Above all, Pertamina has also started to position itself as the first oil company to market bio-diesel oil made with coconut palm as the basic material. It sells its bio-diesel oil under the name of Biosolar with two types of composition: 5 percent coconut palm oil and 95 percent conventional diesel oil (B5) as well as 10 percent coconut palm oil and 90 percent conventional diesel oil (B10). The bio-diesel oil sells for Rp 4,300 per liter, the same price as subsidized diesel oil.

A number of Pertamina officials have promised that the price of bio-diesel oil will be lower in future when national bio-diesel oil production, including fuel made from physic nut plants, has reached mass production level. At present, Pertamina purchases coconut-palm-oil-based bio-diesel oil at Rp 4,600 per liter and provides a subsidy for the price difference.

“Pertamina now sell products that are environmentally sound and meet requirements of (new automotive) technology,” Djaelani said.

Pertamina’s Premium Ron 88, Pertamax Ron 92, Pertamax Plus Ron 95, for instance, meet international standards, while BioPremium Ron 88 and Biosolar are considered environmentally sound, Djaelani explained.

“Meanwhile, Pertamina Dex, a fuel for diesel machines, meets Euro II standards,” he explained.

As competition is becoming increasingly stiffer, you may ask which company will emerge as the winner. The answer is still difficult to give. What is obvious, however, is that the public will choose a gas station that gives competitive fuel prices and offer satisfactory facilities and services.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

0 Comments on “The Jakarta Post: When Pertamina no longer holds monopoly”

Leave a Comment

%d bloggers like this: