National Fuel Oil Price in Papua is Now a Reality!

There was quite a big gap in fuel oil price (BBM) in Papua compared to other regions in Indonesia. These problems are hard to solve because of the access challenges, the lack of transportation, and infrastructure in Papua. But now, under Jokowi’s administration, its all going to change. Since he becomes the President of the Republic of Indonesia, Joko Widodo or Jokowi has always tried to solve problems in Papua, one of them is the fuel oil price gap between Papua and other regions in Indonesia. Its happening now, fuel oil price in Papua is now the same with other regions, and this is the first time ever.

The Minister of State-Owned Enterprise, Rini Soemarno said that, fuel oil price in Papua is now in accordance with the national price. This is the first time it ever happened since the independence of the Republic of Indonesia, cited Detik.

Jokowi acknowledged the unfairness of fuel oil price in Papua and he has asked the President Director of Pertamina to find a solution to make the one fuel oil price in every regions in Indonesia a reality. He also said that the President Director of Pertamina has said to him that it is not an easy task. The company can lose many profits. At that time, he stated, that its not about profit and loss, but about the equality of price in order to increase the welfare of Indonesia people.

fuel oil price in Papua
Fuel oil distribution (with national price) in Papua via

“The price must be the same and hopefully the economic in here (Papua) will start to improve. Electricity (supply) will increase, and BBM price decreases,” said Jokowi.

Furthermore, Pertamina  now has a project called One National BBM Price, so that the Papuans will have the same BBM price with others regions, which is 6,450 IDR/liter for premium and 5,150 IDR/liter for solar. Pertamina is now providing more Gas Station (SPBU) and Oil and Diesel Distributor Agents (APBS) in Papua, because they know that the rarity of the supplying agents are the cause of the high fuel oil price in Papua. Pertamina is the only one that will build and own the APMS and SPBU, therefore, they can control and manage the price in Papua to be the same with national price. They also know that the transportation costs to Papua are very high, because of the distance, challenging access, and also poor infrastructures. In order to solve this problem, they are going to cover all of the transportation costs until it’s delivered to the APMS and SPBU.

“Hence, Pertamina will subsidize the transportation costs to APMS. Not only to Papua but also for the all of the regions in Indonesia. Pertamina will handle all of the transportation costs until it reached the APMS location, no matter where it is,” said the Marketing Director of Pertamina, Ahmad Bambang, cited from detik.

Although the fuel oil demands in Papua is not too big, only around 5% of the national demand, but Pertamina will prepare 900 billion IDR of budget to subsidize the Premium and Solar BBM in Papua.  Pertamina is using the cross-subsidization from the profit in other regions in Indonesia to subsidize the BBM transportation costs in far away and remote places in Indonesia.

“Usually companies always think about the profit, with that profit they can reinvest for the sustainability of the company itself. We are going to change that pattern, not only to sustain but also for social cause. So it can support development, sustainability and it’s beneficial for the people,” Bambang said, cited from detik.

The realization of national fuel oil price in Papua has been through some journey. It was started with subsidized fuel oil and also the development of official Premium and Solar Oil Agent (APMS) from Pertamina that is expected to help keep the price low. 

The BBM price reduction in Papua, can hopefully make good impact in Papua. By reducing the cost of production, transportation, and logistics, fuel oil price in Papua is attainable for everyone.


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