Not so many years ago, the only places to stop along toll roads were gas stations. But these days, toll-road gasoline stations offer so much more, such as somewhere to rest, eat and even shop.
Along the 72 km Jakarta-Cikampek toll road, which links Jakarta and West Java, for example, there are a number of rest areas with class. There you can find a gas station, restaurants, canteens, a place of worship, a workshop, toilets and a vast parking area. There are even vendors that can be found in malls such as Starbucks, Pizza Hut, Solaria and Dunkin Donut. There are also ATMs.
Indeed, since 2003, PT Jasa Marga has offered private investors the opportunity to build rest areas so that the best service can be extended to toll-road users. However, on the other hand, it is undeniable that selling gasoline takes a lot more sophistication than simply just filling up the tank.
The liberalization of the gasoline market in Indonesia, introduced in 2001, has not only abolished the monopoly held by state oil and gas firm Pertamina but has also encouraged foreign companies, such as Malaysia’s oil firm Petronas and Holland’s Shell, to gain access to this lucrative market. One consequence is that Pertamina can no longer raise its prices at will. When international fuel prices went up last year, retail prices did not automatically go up. At one Pertamina gas station on Jl. Mampang Prapatan, South Jakarta, for example, the prices of Pertamax and Pertamax plus remained unchanged. The reason was that Shell, located in close proximity to this gas station, did not raise the prices of these two types of fuel.
Like it or not, competition in the retail gasoline business in Indonesia has increased following the ending of over 30 years of Pertamina’s monopoly over fuel distribution in November 2005. Shell Indonesia, a subsidiary of oil giant Royal Dutch Shell Plc, became the first foreign company to retail gasoline here.
Starting with a gas station in Lippo Karawaci, Tangerang, Shell has expanded its network. This company, with a seashell as its logo, has introduced the concept of a filling station with a modern design, which has free services such as air for tires, windshield washing and topping up the radiator.
Besides Shell, PT Petronas Niaga Indonesia, a subsidiary of Malaysia’s Nasional Bhd oil company, has obtained a permit to build 200 filling stations at a total investment of US$200 million. With an initial investment of Rp 10 billion, this company has opened one filling station in Cibubur, East Jakarta.
With its location only about one kilometer from the Cibubur toll road exit ramp and being open around the clock, Petronas seems to be setting its sights on car owners on their way home from the office who are concerned with the performance of their car engines.
Petronas plans to have 200 filling stations in major cities in Java by 2011. Over the same period, its strong competitor, Shell, expects to have 400 filling stations.
Perhaps Pertamina needs a new strategy to counter these newcomers. In the meantime, it has applied a franchise system in the development of the number of filling stations. This system ensures that it stations are managed more efficiently in facing the entry of foreign players. Franchise fees amount to Rp 200 million to Rp 500 million, depending on the quantity and the target that the management of a filling station wishes to reach. “At least 15 tons of oil fuel a day,” said an official of Pertamina assigned to handle this project.
Another program is related to customer satisfaction. As an initial step, Pertamina has renovated gas stations to create uniformity, not only in the physical aspects of the buildings but also in services provided through a standard operation procedure so that maximum services can be rendered to customers.
Currently Pertamina and its business partners operate at least 4,000 filling stations all over Indonesia. Of this number, about 5 percent belong to Pertamina outright.
Indeed, it is impossible for new players like Shell and Petronas to catch up with Pertamina in terms of quantity. However, what’s clear is that these two foreign players are planning to establish filling stations outside Java this year. They have already opened a number of filling stations in Jakarta and its surrounding areas. According to the director of downstream development of the Directorate General of Oil and Gas at the Ministry of Energy and Mineral Resources, Erie Soedarmo, the establishment of these filling stations could signal the preparation of these two companies to enter the business of selling subsidized unleaded gasoline and diesel oil.
According to Law No. 22/2001 on oil and gas, the government must open up opportunities to companies other than PT Pertamina (Persero), which previously monopolized the supply of subsidized fuel, to enter this business.
In fact, the Downstream Oil and Gas Regulatory Agency (BPH Migas) has opened up opportunities for non-Pertamina companies to supply subsidized fuel in 2007. However, as non-Pertamina companies do not fulfill the requirements set by BPH Migas, Pertamina remains the only company to supply subsidized fuel. One of these requirements is that a company should operate a filling station in two commercial regions, namely Java and outside Java.
Indonesia, with a population of 234 million, is obviously an alluring market. Statistics also show that every year there is a constant increase in the number of motor vehicles. Motorcycle imports total four million, with an average growth of 10 percent per year. In total, motor vehicles’ fuel consumption makes up almost half of the total national fuel consumption of some 60 million kiloliters a year.
Given the condition of the market, it is little wonder that many parties are keen on operating in the retail oil business. So far, almost 180 companies have expressed an interest in the oil distribution business. They include oil giants of the class of Chevron Pacific Indonesia, BP and Total Indonesie. Competition in the market looks set to get really exciting! (Reyhan Fabiano)
The Jakarta Post
September 18, 2007