Shell removed from list of subsidized fuel distributors

Alfian ,  The Jakarta Post ,  Jakarta   |  Tue, 11/03/2009 1:05 PM  |  Business

PT Shell Indonesia, the local subsidiary of global oil and gas giant Royal Dutch Shell, will not be joining three other companies in distributing subsidized fuels next year, downstream oil and gas regulator BPHMigas said Monday.

BPHMigas' chairman Tubagus Haryono said that Shell had missed the deadline to submit a letter stating that it would accept the assignment.

"Shell should have submitted the letter by Oct. 26. But, what we received was a letter on Oct. 29 in which the company requested to extend the deadline until Nov. 4.

"We cannot accept this as we must treat all companies equally," Tubagus said.

Previously, the job to distribute subsidized fuels was always given to state oil and gas firm PT Pertamina.

But, for next year, BPHMigas had chosen three other companies to help Pertamina distributing the fuels outside Java. The three companies were: Shell, PT Aneka Kimia Raya Corporindo (AKR), and PT Petronas Niaga Indonesia.

Shell had been chosen to distribute up to 5,110 kilo liters a year, or 14 kilo liters a day, of Premium gasoline in Medan, North Sumatra.

Last week, Shell expressed its reluctant to distribute the fuels in Sumatra, which is outside its existing distribution system.

"Our proposal is to distribute the subsidized fuels in areas that include Java and Bali, but BPHMigas has opened up this opportunity outside Java.

"Of course, this will have an impact on our business plan. Therefore, we are now reviewing this," Shell Indonesia's president director Darwin Silalahi has said.

Tubagus said that the other two companies - AKR and Petronas - had submitted letters stating that they would accept the assignment. "We require them to complete the distribution infrastructure by Dec. 14," Tubagus said.

The government subsidizes Premium gasoline, diesel and kerosene.

Under the 2010 state budget bill, the government estimates that subsidized fuel consumption next year will reach 21,454,104 kiloliters for Premium gasoline; 11,250,675 kiloliters for diesel and 3,800,000 kiloliters for kerosene.

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