Govt approves Rp 2 trillion fuel conversion project

State oil and gas firm PT Pertamina will spend Rp 2 trillion (US$212.02 million) to build gas infrastructure in Greater Jakarta and Surabaya, East Java, this year.

The money would come from the state budget and the Energy and Mineral Resources Ministry has signed off on the project, Pertamina gas director Hari Karyuliarto said on Thursday after the Italian Converter Kits Technology seminar in Jakarta. “We have received official appointment for the project.”

To support the government’s gasoline-to-gas-fuel conversion program for vehicles, Pertamina will open 30 gas stations in Greater Jakarta, three in Surabaya, and five mobile fuel units for taxi and bus fleets by year end, Hari said.

“The construction and procurement will only take a couple of months. The biggest challenge by far is land acquisition, which will be taken care of by local governments.”

Hari said he expected to work with the private sector on the project, despite the disincentive of higher gas prices. “Pertamina needs partners. This won’t just be a job for one man.”

There are currently 17 stations providing compressed-natural gas (CNG) and liquefied gas for vehicles (LGV) in Greater Jakarta and Surabaya.

At the same event on Thursday, Italian CNG converter kit manufacturers looking for local partners gave presentations to representatives from about 60 local companies.

Three Italian firms — Faber Cylinders, Landi Renzo and BRC Gas Equipment — have expressed interest in the Indonesian market after the government implemented its oil-to-gas conversion program to reduce subsidized fuel consumption.

The sales manager of BRC Gas Equipment, Giuseppe Rinaldi, said that the company would focus more on winning government tenders than direct sales.

“We hope to get some of the converter kit tenders and we assume we can get at least 30 or 40 percent,” Rinaldi said, referring to tenders for 14,000 converter kits for public transportation vehicles on offer from the Energy and Mineral Resources Ministry.

As Indonesia’s gas infrastructure continues to develop, BRC will shift its focus to retail markets, Rinaldi said.

The Industry Ministry’s director general for high-technology priority industries, Budi Darmadi, said that the Italian firms might cooperate with state-owned companies such as publicly traded construction firm PT Wijaya Karya (Wika) and state arms manufacturer PT Pindad.

“Wika has the ability to manufacture automotive components and LPG tanks,” Budi said.

Italian Trade Commissioner Massimiliano Sponzilli said that some Italian companies already had experience in Asian markets such as India, Pakistan and Japan, which would aid their entry into the Indonesian market.

Sponzili said that several major automobile makers had worked with Italian fuel-converter firms, including Chevrolet, Volkswagen, Suzuki and Toyota. (yps)