REPUBLIKA.CO.ID, JAKARTA - Government's plan to build an oil refinery to increase domestic production is still hampered by some obstacles. Director of Oil and Gas Downstream Business Development in Ministry of Energy and Mineral Resources, Mohammad Hidayat said that one of the problems was distribution location which related to fuel subsidy.

Indonesian system with high fuel subsidy has attracted many investors. With total fuel consumption in Indonesia reached 75 millions kilo liters (kl) in 2013, subsidized fuel reached 46.3 million kl or about 62 percent was subsidized by the government.

Hidayat said that government would seriously carry out the project plan to develop new refineries to able to produce about 300 thousand barrels per day (bpd) through public private partnership (PPP) scheme. Currently, existing oil refineries in Indonesia is only capable to produce 13 millions kl per year while the total fuel consumption is 30 millions kl per year. Hence, government import 17 millions kl to fulfill the demand. Currently government is waiting for serious investor to build the planned refinery. 

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