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tate-owned oil and gas giant Pertamina plans to replace Premium low-specification gasoline to follow up on a recommendation to gradually phase out the widely used gasoline.

Pertamina marketing director Ahmad Bambang said Thursday that the company would start selling the new product as early as next month in several major cities in the Java area, such as Jakarta, Surabaya and Semarang.

'€œThus, [in those areas] Premium will only be available at gas stations frequented by public transportation and at gas stations located in sub-urban areas,'€ Ahmad said.

'€œThe new product will be more powerful and environmentally friendly,'€ Ahmad claimed.

He declined to reveal the price range and planned volume of the new product.

The new product will have a higher specification of registered octane number (RON) 90 compared to Premium'€™s specification of RON 88. Premium was formerly a subsidized fuel product sold by Pertamina until earlier this year when the government overhauled energy sector subsidies.

The government spent last year around Rp 240 trillion on fuel subsidies, consisting of gasoline, diesel fuel and kerosene, liquefied petroleum gas (LPG) and biofuel. The government decided to eliminate the gas subsidy, which, because of its massive volume of around 46 million kiloliters, used to be the biggest among other products, and set a fixed subsidy for diesel. Following the energy subsidy overhaul, the state budget only allocated Rp 60 trillion for fuel subsidies.

The elimination of the usage of RON 88 gasoline has also been recommended by the Energy and Mineral Resources Ministry'€™s ad hoc reform team for the oil and gas sector. The team argued that gasoline with RON 88 in specification was no longer used in many other countries and was hard to find in the market.

Therefore, it said, RON 88 had been in limited supply and that the continued use of the product would only increase Pertamina'€™s procurement and blending costs.

However, immediately scrapping RON 88 is seen a not viable because most of the country'€™s refineries are only able to produce fuel with that specification while importing products with higher specifications will likely hurt the country'€™s economy. Pertamina is currently working to upgrade its refineries so that they will be able to produce fuel products with higher RON specifications.

The chairman of the Association of Fuel Station Owners (Hiswana Migas), Eri Purnomo Hadi, said Pertamina had been approaching station owners about its plan to introduce its new product.

'€œPeople are enthusiastic about the fuel with higher specification to be sold at a low price. It is unlikely that there is fuel with 95 octane sold at a low price. So, the RON 90 or 91 will be a breakthrough,'€ Eri said.