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President Jokowi hints at dismantling Pertamina’s monopoly in selling jet fuel

A Pertamina truck uploads jet fuel to an aircraft (Photo credit: Pertamina)

JAKARTA (RambuEnergy.com) – Indonesian President Joko Widodo, popularly known as Jokowi, has hinted at dismantling the monopoly of the state-run energy company PT Pertamina in selling aviation or jet fuel at the country’s major airports across the country.

In responding to the complaints of the Indonesian Hotel Operators Association (PHRI) in Jakarta on late Monday, President Joko Widodo said he was surprised to know that jet fuel sale at the Soekarno-Hatta international airport has been monopolized by Pertamina.

He said Pertamina may  be given two options,  set the jet fuel price at the same level with the international jet fuel price, or allowing other players as competitors to sell aviation fuel in domestic market.

Tourism industry and logistic players have blamed the price of jet fuel as the reason for the high airline ticket prices. The jet fuel price, according to observers, contributed 24% to the cost of the operation of an aircraft. Therefore, pushing down the aviation jet fuel may help reduce the domestic airline ticket prices.

In response to the criticism, Director for Retail Marketing of Pertamina Mas’ud Khamid said Tuesday that there is room to reduce the jet fuel price. “There is such possibility. We will see,” he told reporters at the office of State Owned Enterprise Ministry.

Meanwhile, Deputy SOE Minister for Mining, Strategic Industries and Media Harry Sampurno said the jet fuel price has actually declined since November 2018 and that the price of jet fuel at the Soekarno Hatta Airport has been competitive enough compared to the jet fuel price in other South East Asian countries.

Vice President Jusuf Kalla said the fuel retail market has actually been opened up to private sector. Unfortunately, so far, only Pertamina that has fuel distribution facility at major airports. “So, actually fuel sale is no longer 100% monopolized by Pertamina,” he said.

Some observers argued that if the jet fuel sale is opened up to other players, private sectors may only want to sell jet fuel at airports that are busy or considered profitable and would be reluctant to sell jet fuel in smaller airports due to higher costs.

Meanwhile, Pertamina has to also sell jet fuels in other smaller airports although such efforts are costly, given its status as a state-owned company, which is sometimes required to serve the public, not purely seeking profit.

Therefore, some observers call on the government to consider thoroughly before dismantling Pertamina’s monopoly in selling jet fuel.

As a follow of the President’s statement, the Transportation Ministry Budi Karya said his office plans to hold coordinating meeting with other related ministries and stakeholders to discuss the aviation or jet fuel price issue today (Feb. 13). (*)

Written by Roffie Kurniawan (Email: roffie.kurniawan@gmail.com)

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