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Indonesia: Pertamina Fuel Retail Network Revamp

Indonesia: Pertamina Fuel Retail Network Revamp

Pertamina Retail to refurbish key fuel service stations in its network seeking to develop non-fuel business.

Pertamina is assigning subsidiary Pertamina Retail to revamp over a hundred of its fuel service stations in an attempt to develop a new revenue source. The envision of Pertamina is that one day, more people will spend their precious free time at fuel service stations without having to endure the distinct smell of gasoline. Which is more one of the reasons for Pertamina Retail to build more fuel service stations equipped with cafés, convenience stores and even car washes, claiming that this will be more profitable for the company rather than just selling gasoline to drivers and motorists.

According to Pertamina Retail president director Toharso, 70 percent of the company’s net profits currently came from fuel sales, while the remaining 30 percent came from its non-fuel business, such as convenience stores and cafés, known as “Bright”. On the word of Pertamina Retail’s financial report the company booked Rp 108.5 billion (US$8.34 million) in year-to-date net profits in August, or 48.3 percent of its annual target of Rp 224.6 billion and expects the contribution from the non-fuel side of the business to slowly change and balance the contribution from fuel.

A recent study by major consulting firm McKinsey and Company claims that by 2030, the country’s middle-class will have reached 135 million people from 45 million at present and as a result of this, market opportunities in consumer services will reach $1.8 trillion from the current estimate of $0.8 trillion. Toharso said that the potential is out there. About 3,000 daily transactions are recorded at our fuel service stations. At key retail service stations, such as in Kuningan, over 5,000 non fuel transactions take place daily..

The Bright stores and cafes are now available at (COCO) fuel service stations, which are located at 136 fuel service stations out of a total of 5200 stations throughout the country. Demand for fuel is higher in Java and Bali where 60 percent of the COCO fuel service stations are located.

Also Pertamina Retail plans to provide product bundles for fuel purchases and to issue e-money cards (B-card). An additional 1000 new fuel retail service stations are planned to be operated by the company by 2020. According to Toharso, there were two viable schemes to achieve the target, namely by taking over independent owned sits and by teaming up with dealers through a cooperation contract (KSO) scheme. He further added that more and more business people are offering them the opportunity to take over their fuel service stations on the back of surging land-rent costs.

The company is also pondering over the probability of building new fuel service stations on idle land that it owns. However, the option is not a top priority given the various hurdles that need to be overcome in order to do so, such as navigating through complex bureaucracies to obtain permits. Rp 1 trillion in capital expenditure will be allocated by Pertamina Retail next year and a majority of the figure will be used to acquire or build 200 new COCO fuel service stations. Source: JakartaPost PWKD06102016.

Last modified onThursday, 06 October 2016 20:48
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