D

espite the government’s good intentions, the one-price fuel policy is unlikely to be effective unless the government starts taking development in remote regions seriously.

The Energy and Mineral Resources Ministry recently issued a ministerial regulation that will allow people in Papua and West Papua to buy Premium gasoline for Rp 6,450 per liter, diesel for Rp 5,150 per liter and kerosene for Rp 2,500 per liter starting in January next year.

The regulation is a follow-up to President Joko “Jokowi” Widodo’s commitment to make the price of fuel the same in all regions across the country, slashing prices from Rp 50,000 to Rp 100,000 per liter in Papua and West Papua.

The regulation also stipulates that the Downstream Oil and Gas Regulatory Agency (BPH Migas) will be tasked with ordering state-owned oil and gas firm Pertamina to supply fuel to new locations, chosen by the ministry. Furthermore, the agency can implement sanctions if the company violates the regulation.

The policy will force Pertamina to allocate Rp 800 billion in subsidies every year.

However, Pertamina remains upbeat about its new challenge. Spokesperson Wianda Pusponegoro said the company was planning to add 22 fuel distribution agents in Maluku, North Maluku and Papua. Pertamina plans to allocate Rp 54 billion for the projects.

“The funds can come from investors in the fuel distribution agents,” she told The Jakarta Post on Monday.

As of May, Pertamina had 481 gas stations and 397 distribution agents across the country, including 19 distribution agents in Papua and 13 in West Papua.

Within the first nine months of this year, the company saw a 17 percent annual decrease in revenues to US$26.62 billion. However, renegotiation of existing contracts and operational cost-cutting measures made the company’s net profits soar 210 percent to $2.83 billion.

ReforMiner Institute researcher Pri Agung Rakhmanto said the new policy was unnecessary as the government already decided on the prices of non-subsidized fuel every three months. The problem, he said, was mostly related to the lack of gas stations in the region, leading to large numbers of illegal gasoline sellers who often doubled or tripled the selling price.

Although there might be a small decrease in price, Pri Agung doubted that the selling prices would reach the prices in Java and Bali unless the government established policies that would lead to serious infrastructure development, especially in the construction of gas stations.

“President Jokowi must order the construction of more gas stations in those regions. If he leaves it up to Pertamina, they will probably be more business-minded,” he said.

Pertamina previously complained that since distribution agents only stocked a small amount of fuel with small profit margins, investors were often reluctant to place their money in the distribution agents.

In order to counter this, the new ministerial regulation stipulates that different profit margins be prepared depending on the region. The regulation also dictates that Pertamina must give a higher margin fee for distributors in those regions.

Currently, the profit margin on the sale of premium gasoline in Pertamina’s gas stations stands at only Rp 270 per liter.

Although Pertamina is the only company that currently distributes subsidized fuels, Energy and Mineral Resources Minister Ignasius Jonan said the same regulation would apply to other companies that may want to start distributing premium gasoline, diesel and kerosene in remote regions.

“Those who receive appointments to distribute the subsidized fuels must distribute them with the same price. However, this does not apply to other types of fuels,” he said.