T

he Downstream Oil and Gas Regulatory Agency (BPH Migas) believes that the government will be able to reach its target of providing the fuel stations needed in Indonesia’s remotest areas this year as part of its one-price fuel policy, even though a considerable number of them are yet to be built.

The agency said construction of the project stations had been secured by their respective investors, all of whom were Indonesia-based.

However, the agency acknowledged it was facing a number of issues in establishing the stations, including disagreements between central and local governments on the locations and lack of interest from investors about investing in necessary infrastructure.

“It is not that we have not talked to them [local authorities] at all, but rather because their investment calculations exceed what is economically possible for us,” BPH Migas committee member Henry Ahmad said at the agency’s headquarters on Wednesday.

As many as 26 out of the targeted 54 fuel stations are fully operational, while six are slated to be inaugurated between October and November, the agency’s data show.

The six stations are located in Berau regency in North Kalimantan, Klungkung regency in Bali, Pegunungan Bintang regency in Papua, Tambrauw in West Papua, Talaud Islands regency in North Sulawesi, and in Riau Islands.

Meanwhile, the construction of eight stations is over 75 percent complete and they are expected to ready this December.

However, the remaining 14 are only about 10 percent to 20 percent complete, the agency’s data show.

Despite such problems, the agency is committed to improving its coordination and strategy next year, when it plans to build at least 50 more stations.

Henry said the agency had suggested local authorities opt for more modest fuel stations at locations far from existing ones, hence increasing competitiveness and the possibility of being built immediately.

The agency also plans to set a series of rules to standardize fuel-station construction as part of cost control.

“I said the other day when visiting Sumbawa Island that if we can lower the cost to Rp 75 million [US$5,548], why don’t we make them that way? Just like a retail fuel seller but with the same standards,” Henry said.

In addition to that, he argued investors needed incentives to build fuel stations in remote areas, and that state-owned energy firm Pertamina was willing to provide such stimuli.

In his calculation, investors would only gain Rp 45,000 based on regular profit estimates if they sold 300 liters of fuel a day, while they had to spend at least Rp 200 million to build a fuel station, showing that such an investment was high-cost.

At the same time, in Papua, Pertamina had given fuel station investors higher profit margins of around Rp 600 to Rp 700 per liter of fuel, compared to the regular margin of about Rp 150, he said.

Despite Pertamina giving higher profit margins to investors, fuel prices would remain the same, as the company would absorb the loss caused by such mechanisms, he added.

The agency has proposed giving Pertamina Rp 1 trillion annually from its annual non-tax revenue (PNBP) to ease the company’s financial burden in its quest to fully implement the one-price policy.

The proposed fund may help Pertamina expand the coverage of the policy, which aims to cut the price disparity of fuel between regions across the sprawling archipelago of more than 17,000 islands.

However, the agency still had yet to realize the plan as it would need to discuss it further with related stakeholders, including the Finance Ministry and Energy and Mineral Resources Ministry, Henry said.