Pertamina LPG conversion program goes too slowly

Alfian ,  The Jakarta Post ,  Jakarta   |  Tue, 10/07/2008 10:01 AM  |  Business

State oil and gas firm PT Pertamina may not be able to meet this year's target for the government's kerosene-to-LPG conversion program due to a lack of canisters and refill stations.

Hanung Budya, the deputy director of marketing at Pertamina, said Monday the number of households receiving liquefied petroleum gas (LPG) cylinders and gas stoves by the end of this year might be below target.

"We have set a target of 20 million recipients this year, but this seems difficult for us. It would be good if we can make it to around 15 million households," Hanung said.

As of mid September, only 9.3 million households received the package, he added.

Hanung cited canister shortages as the main barrier to meeting the target. Since each household needs 2 canisters, Pertamina would need 40 million canisters this year to meet the target.

Unfortunately, Hanung said, the domestic producers could only supply 25 million canisters by the end of 2008.

He added Pertamina had obtained a permit to import about 6 million canisters from China, but China had only been able to supply 1 million canisters so far, with another 1.3 million still being produced.

The limited numbers of LPG refill stations were also mentioned by Hanung as another obstacle in meeting program targets.

"Progress in expanding the network of refill stations is extremely low. About 200 licenses to build and operate have been issued, but only 25 percent of them are currently being built," Hanung said, adding that regional administrators need to pay more attention to support this program.

Aiming to reduce subsidies for kerosene, the government in December 2006 launched the conversion program, to be completed in 2010, with Pertamina as the main implementing agency.

This year, the program is supposed to replace the use of up to 2.1 million kiloliters of kerosene, but, as of October, the replacement level only reached 1.4 million kiloliters.

Lawmaker Tjatur Saptoedy of the House of Representatives' Commission VII overseeing energy and mineral resources said that poor supporting infrastructure for the conversion program was to blame for the program's slow progress.

"The supporting facilities, from canisters to storage space, are far from sufficient," he said.

Tjatur urged the government to consider allowing firms other than Pertamina to join the process of program implementation.

"This job is way too big for Pertamina. It should be the government's job and it can cooperate with any company, state-owned or private, that can contribute to the program."

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