Shell and BP struggle to secure Indonesian fuel supply after scandal

DW (English)

Private gas stations like Shell and BP in Indonesia had run dry for more than three months. No gasoline was available at any of their station, consumers have to buy fuel from the state-owned oil company.

Transcript

00:00In Jakarta, drivers have to sit in line for nearly an hour just to fill out.

00:07For months now, the only source of gasoline has been the state-owned provider Pertamina.

00:13At private stations like Shell and BP, the pumps haven't moved in months.

00:18Once they ran out of supplies, they were not allowed to import fresh fuel.

00:23At times like this, I have no choice but to buy fuel from Pertamina

00:28even though the quality is not good.

00:31I usually buy fuel from Shell, but right now they're completely out.

00:36I feel my car's performance hasn't been good since I switched to Pertamina's fuel.

00:41This all started after a fuel-mixing scandal at Pertamina

00:45pushed many drivers to switch to Shell and BP.

00:48Demand at private stations suddenly exploded,

00:51but Indonesia did not increase their import quota.

00:55Instead of letting Shell and BP import fresh fuel from abroad,

00:59the government told them to buy it from Pertamina, their state-owned competitor.

01:05By stopping private stations from importing fuel, competition has basically disappeared.

01:10And without competition, quality and consumer choice suffer.

01:14The government rejects this.

01:16It says the goal is to keep fuel prices low without monopolizing the market.

01:21Starting in 2026, private stations will resume importing fuel on their own.

01:28There's no monopoly here.

01:29If we were monopolizing, private stations wouldn't exist.

01:32And as for the government involvement, the law requires it.

01:36Anything that affects people's basic needs, in this case energy,

01:39must be controlled and managed by the government for the greatest benefit of the public.

01:44But experts like Fabi Tumiwa at the IESR energy reform think tank argue the shortage shows what happens

01:55when one supplier dominates the market.

01:58Quota rules should never create shortages.

02:01Quotas are necessary, but the system should be flexible and rational.

02:05If private stations can show that their demand has increased, they should be allowed to import more.

02:12And if the supply ends up being excessive, next year the import quota can simply be adjusted.

02:18BP and Shell have now given in and are selling fuel they had to buy from Pertamina,

02:23just to reopen some of their pumps.

02:26Next year, fresh quotas will allow private stations to import their own fuel again.

02:30But unless those quotas grow with demand, the same problem may return and so-called the queues.

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