high octane

Finally, the day of judgement is falling to our beloved state oil company Pertamina. As Aco has mentioned below, Pertamina, once a guru for Malaysian Petronas in the 70's and a current poster boy for an inept state enterprise, will face a direct retail competition from foreign or domestic private fuel suppliers. This means that the company will be become an incumbent in domestic fuel distribution for the first time since it was created.

For Pertamina, decades of walking in the park approach to oil business doesn't seem to bring them anywhere. Investment for exploration field is lacking, its fuel distribution remains vulnerable to shocks , public trust have diminished, and a handful of their officials have taken part in smuggling activities.

For consumers, decades of being neglected may soon come to an end. Private suppliers are likely to help distribution problem through their own supply chain. Private suppliers are also more likely to tap medium and upper income classes appetite for premium grade fuels. The market will also be open for other forms of product differentiation in the form of product choice such as: unleaded fuel, clean diesel, and liquid gas.

The slack in lower market segment is, however, likely to be filled by Pertamina at a subsidized price. This means that subsidy bill is reduced because most typical rich households of 4 persons with 9 European cars would get their high octane from private suppliers. Overall, economic efficiency should improve because the distortionary effect from rich people buying subsidized fuel wll be reduced.