TEMPO.CO, Jakarta - At first, it seemed like a minor problem. But when 42 trucks and tourist buses around Jakarta and Depok broke down, it became a major issue. The cause of the engines' malfunction, it turned out, was that their diesel fuel had been adulterated with water.
This criminal act must be stopped immediately before more damage is done. The police have found an 80-ton tank containing diesel mixed with five tons of water at a gas station in Cilincing, but the police must not stop there. This long-rumored crime most likely occurred at other locations as well.
The people responsible must be punished. Their actions have put consumers in danger and eroded public trust in Pertamina, the state-owned company responsible for the distribution of fuel throughout Indonesia. As such, it must be accountable for the quality of fuel sold and it must immediately restore the confidence of consumers.
There was added confusion because all this occurred at the same time as a series of demonstrations by tanker truck drivers contracted by Pertamina, was taking place. Hence, Pertamina must not delay resolving whatever problem it has with people involved in the oil and gas distribution chain.
This case of adulterated diesel also sent an important signal: the government must carry out an evaluation of the fuel distribution sector. Pertamina, through its subsidiary Pertamina Patra Niaga formerly known as Elnusa Harapan, has long been the largest downstream company. This is the company that transports fuel across the entire country. Such dominance has prevented healthy competition, which has led to frequent poor customer service. Fuel stations often find themselves out of gas, because of late supply delivery, especially outside Java.
However, to accuse Pertamina of being monopolistic would be unfair. Law No. 8/1971 on the State Oil and Natural Gas Extraction Company requires Pertamina to guarantee fuel supplies throughout the country. But since Law No. 22/2001 on Oil and Natural Gas was enacted, the door has been wide open to private sector companies.
And they have come. No fewer than 200 private companies have entered the distribution sector. But according to the website of the Regulatory Agency for Downstream Oil and Gas (BPH Migas), only Pertamina can act as guarantor of fuel distribution to all areas in Indonesia. There may be barriers to new players in the downstream oil and gas sector. Yet, it is not easy nor cheap, to transport fuel from upstream wells and refineries to gas stations in isolated towns and villages. For example, some of their distribution in Papua needs to be subsidized.
Besides to huge investment needed, transporting oil and natural gas to distant places is risky business. Between 2010 and 2014, four Pertamina tanker trucks exploded while carrying fuel. In 2013 and 2014, Pertamina invested Rp 2.4 trillion to acquire fuel tanker ships.
It is this complicated state of affairs that Pertamina and the Energy and Mineral Resources Ministry must address. We hope that Energy and Mining Deputy Minister Arcandra Tahar, as Pertamina's deputy chief commissioner, will make this his priority task. In addition to enabling a healthy business climate in the oil and gas sector, Arcandra should also play an active part in overseeing the public interest by monitoring fuel distribution, and ensuring that no more adulterated diesel reaches consumers. (*)
Read the full story in this week's edition of Tempo English Magazine
