Prices have been much higher up to 15 times higher in the countrys easternmost regions than in Java.
The price tag for BBM could be as high as Rp100,000 per liter as against Rp6,500 in Jakarta . Cement is priced at more than Rp1 million a sack compared to only around Rp70,000 in Java.
The president has been told by Pertamina that the policy would mean additional cost of Rp800 billion it has to pay every year for BBM distribution in the two provinces if the policy is to be implemented.
In answer the president said it is a matter of social justice that needs to be implemented in the two backward regions.
PT Pertamina, therefore, moved immediately by starting with the setting up of distribution agents for BBM in eight regencies in the two provinces.
President Director of PT Pertamina Dwi Soetjipto said implementation of the policy has been underway since last August with the last in the regency of Intan Jaya in October.
The main problem in the distribution of BBM in the two provinces is difficult terrain and limited road infrastructure to reach interior areas.
Distribution cost for BBM in the two provinces range from Rp4,000 to Rp29,000 per liter.
If distribution is hampered , the BBM price could surge to as high as Rp100,000 per liter.
Therefore, apart from appointing and strengthening BBM distribution agents, Pertamina also operates Air Tractor for BBM transport. Air Tractor aircraft units have been operated - one in Papua and West Papua and one in North Kalimantan.
In Papua the Air Tractor Aircraft is for BBM distribution from the regency of Timika to the regencies of Puncak, Tolikara, Membramo Tengah, Yalimu and Intan Jaya.
BBM transport for the regencies of Nduga and Membramo Raya is made by ferries through rivers and sea, and distribution to the regencies of Pegunungan Arfak is made over land.
Another Air Tractor would be used in December 2016 in the region. The Air Tractors are operated by Pertaminjas subsidiary PT Pelita Air Service.
In a bid to reduce the price of BBM in the interior areas of Papua , Pertamina expanded the storage capacity of the agents to strengthen BBM security in the mountainous regions.
Dwi said Pertamina has to make cross subsidy to cover the additional transport cost of Rp800 billion for BBM transport and distribution in Papua and West Papua alone.
With the subsidy Pertamina could sell BBM in the district areas of Papua and West Papua at the same prices as in Jakarta.
A lawmaker of the Commission VI of the House of Representative Bambang Haryo Soekartono asked the government to thoroughly study the system of BBM transport in various regions that the BBM regimented price policy would work.
The decision of President Jokowi in cutting the BBM prices in Papua and West Papua deserves appreciation but it needs thorough study before it is fully implemented to prevent manipulation, he said.
The cause of the sharp price difference between Papua and Java, is the transport and distribution cost. The same problem is faced in the interior areas of Kalimantan, Maluku, and Sumatra.
The country has 141 ports in the country . The operation of the ports should help cut the distribution cost as sea transport cost is much cheaper than transport cost overland.
The problem, however, is the country still is short of mass logistic transport vehicles especially in isolated areas.
More railways for mass transport are still needed. Other countries could cope with sharp price difference as they have mass transport vehicles mainly railways to reach interior areas. In Australia and China, which have much vaster territory than Indonesia, there is no much differences in BBM price between urban and rural areas or interior areas.
Price stability at reasonable level would contribute to economic development and would help the business sector to flourish.
General chairman of the Papua branch of the Indonesian Chamber of Commerce and Industry Adolf Alpius Asmuruf said the Jokowi price police in Papua and West Papua deserve full support as it would have positive impact on the economy in the regions and would greatly improve the welfare of the local people especially in the interior areas.
The policy is also expected to attract investors to Papua and West Papua as it would greatly cut investment cost .
Chairman of the Papua Branch of the Indonesian Association of Construction Companies (Gapensi) Erick Wally, construction industry needs large supply of BBM and the cut in price would greatly help business in the construction sector.(*)
Reporter: Ahmad Wijaya
Editor: Heru Purwanto
Copyright © ANTARA 2016
