Billions at Stake in Worsening Kalimantan Fuel Standoff

Tunggadewa Mattangkilang, Muhamad Al Azhari & Faisal Maliki Baskoro

Billions of dollars are at stake as businesses struggle to get the fuel they say they need from the central government to operate effectively in Kalimantan, the biggest region by area in Indonesia.

“This matter has to be addressed by the government,” said Supriatna Suhala, executive director of the Indonesian Coal Mining Association (APBI). “The only way to solve this problem is for the government to provide an adequate supply of fuel to this region, because when there is a lack of fuel, everybody will get upset.”

In response to the island’s four provincial governors threatening to halt the mining and shipping of minerals by May 31 if their demand for more gasoline isn’t met, the central government announced last week that it would raise the quota of subsidized fuel. However, no details were given on when or by how much.

Businesses in Kalimantan may be losing as much as Rp 10 trillion ($1.1 billion) a month because they lack the fuel to conduct basic operations, including transporting goods, according to the Indonesian Chamber of Commerce and Industry (Kadin).

“The last three months saw the most devastating situation in terms of the fuel scarcity in Kalimantan,” Endang Kesumayadi, deputy chairwoman of the chamber overseeing Kalimantan, said in a statement on Monday.

“Lines as long as three to four kilometers were seen at gas stations. The price for gas skyrocketed to as high as Rp 20,000 per liter, but people managed to afford it.”

Low-octane subsidized fuel usually sells at a fixed price of Rp 4,500 per liter. Endang did not explain how Kadin arrived at the Rp 10 trillion figure, which is equal to 5.2 percent of Kalimantan’s gross domestic product for the first quarter.

Kalimantan is rich in natural resources, including coal, oil, natural gas and gold. It is home to sites operated by Bumi Resources, the biggest coal miner in the country.

Indonesia produced 340 million tons of coal last year, with 80 percent coming from Kalimantan. If the same amount of coal were blocked from the island this year at an export rate of $50 a ton, that would be equivalent to around $14.5 billion, according to Supriatna.

South Kalimantan Governor Rudy Ariffin said the central government gave the island just 5 percent of the 40 million kiloliters of subsidized fuel allocated in the state budget for this year. That quota is partly based on usage by population and industry. Kalimantan is home to 14 million people, or around 6 percent of Indonesia’s total population of 240 million.

“Ideally, Kalimantan should have been provided with 7 percent,” Rudy said.

The minister of energy and mineral resources, Jero Wacik, said on Friday that the government would give the island more subsidized fuel but Kalimantan’s residents would like to know when.

Kadin chairman Suryo Bambang Sulisto urged the government to prevent a shutdown on shipping and mining on the island by meeting the fuel demand.

Supriatna said he sympathized with residents’ demands to block shipments of coal and other minerals. Several groups say they already have about 250 boats and are prepared to block the main rivers in the province to prevent loaded barges from leaving.

“I can fully understand why they are so upset. No fuel, no activity,” Supriatna said. “If you are a Kalimantan native, wouldn’t you be upset with the central government? If this is the only way to get the central government’s attention, then that’s what you have to do.”

Additional reporting by Dion Bisara