Fuel Price Hike May Cause Foreign Gas Stations to Mushroom

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  • SPBU Shell di Jakarta. TEMPO/Andika Pradipta

    SPBU Shell di Jakarta. TEMPO/Andika Pradipta

    TEMPO.CO, Jakarta – The government’s plans to increase fuel prices have provided foreign oil companies with opportunities to expand their gas station businesses in Indonesia. 

    “That is why when fuel prices are increased, Jokowi must keep his promises not to let foreign [companies] take over the local gas stations,” former finance minister Fuand Bawazier said in a discussion on Monday, September 29, 2014. 

    According to Fuad, the fuel price hike will encourage the government to remove fuel subsidy and channel it to other sectors. However, one of the reasons of subsidizing fuel prices is to keep foreign companies from controlling the gas stations business.

    “The turnover [from gas station business] is very high. It can reach trillions of rupiah,” he said.

    Fuad said among the advantages of subsidizing fuel is keeping foreign oil companies, such as Total EP, Exxon Mobil, Chevron and Petronas, from dominating the business. Fuad added that if the price was based on the market, it would give them an opportunity to become big players.

    To prevent that, Fuad hoped Jokowi would not provide foreign oil companies with such opportunities when fuel prices were to be increased. In addition, foreign efforts to control government’s oil and gas sectors will pose a threat for the incoming government.