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Why are private petrol retailers in Indonesia facing shortages?

Indonesia's private petrol retailers are experiencing gasoline shortages as a result of a surge in demand. This is due to the fact that consumers have moved away from Pertamina, which is owned by the state. They were concerned about its fuel quality. The government has also capped imports.

Shell, BP and other companies have had to sell diesel only at many fuel stations.

Why did fuel demand at private retailers surge?

In February, Indonesia's Attorney-General named former executives from Pertamina as suspects in an investigation into corruption. He claimed that the executives had given instructions to mix lower-grade gasoline with 92-octane, which might cause engine problems. State energy firm denied this claim and promised to improve transparency.

Many consumers still switched to private retailers.

In a Wednesday parliamentary hearing, the Energy Ministry said that Pertamina’s gradual change in late 2017 to require customers to register for a code QR before buying subsidised gasoline was also a factor. In Indonesia, only Pertamina offers subsidised gasoline.

The ministry's data shows that the daily sales volume of Pertamina 90-octane fuel subsidised by the company fell 5% in July this year, while sales of all grades of gasoline not subsidised rose 19%.

Pertamina is expected to sell 7 million kilolitres of non-subsidised gas this year (44 million barrels), while private companies will likely see a 91% increase in sales to 1.35 millions kilolitres.

Pertamina’s share of the unsubsidised gas market in January-July, this year, dropped from 89% to 85%.

Why don't private retailers import more fuel?

Shell and BP AKR, a joint-venture that operates BP gas stations, asked for additional gasoline import quotas in June after the demand surged. This week, executives from both companies told a parliamentary panel.

The Indonesian energy ministry sent a letter on July 17 to five private petrol retailers in the country, stating that each retailer's 2025 imports of gasoline were limited at 10% over what they sold last year.

Laode Suleman, senior official in the energy ministry, explained that the limit was set to ensure a healthy balance sheet of commodities.

CAN PRIVATE RETIENDERS import through Pertamina?

According to Laode, the government instructed private companies last month to import via Pertamina. Pertamina still has 6.81 mililitres of unutilized import quotas for 2025.

Pertamina agreed to import base gasoline, which is not dyed or blended with additives. The first cargo of 100,000 barrels for private companies arrived last week.

What's stopping private retailers from buying base fuel from Pertamina?

Pertamina has faced some challenges in allowing retailers to purchase fuel.

Pertamina announced last week that Vivo, a retailer affiliated with Vitol, had agreed to purchase 40,000 barrels from the first import cargo. Achmad Muchtasyar said that the deal failed because the fuel contained ethanol.

Vanda Laura told a parliamentary hearing that BP-AKR also wanted to purchase a portion from the 100,000 barrel shipment. They asked Pertamina for a certificate of source to prove the cargo wasn't sourced from producers sanctioned by the government.

Shell stated at the hearing it was conducting due diligence and early stage talks with Pertamina. (Reporting and editing by Fransiska Nangoy, Florence Tan, and Christian Schmollinger).

(source: Reuters)