The Role of Logistics and Sea Toll Road in Making Fuel Price Low in Papua

Transportation has a vital role in delivering daily necessities especially to remote areas, as shown by the fuel price in Papua.

In the easternmost province of Indonesia, as quoted from "Kompas.com", one liter of fuel is priced at Rp60,000 to Rp100,000 at some remote regencies, much higher than the Rp6,450 per liter price tag on Java Island.

The government aims to reduce fuel price in Papua by operating Pertamina’s dedicated transport aircraft that’s worth Rp800 billion. The aircraft has made it possible for fuel to be distributed via air transportation, alongside land, and water transportation.

The aircraft's Rp800 billion price tag would not make Pertamina suffer a loss, said President Jokowi.

"This year, I am projecting that we will reap more than Rp40 trillion profit instead," said the president in Jakarta as quoted from "Kompas.com" on Wednesday, December 21, 2016.

Logistics costs could be lowered if sea toll road construction can be completed in 2019, as sea vessels and land vehicles can distribute goods in a large capacity.

What is sea toll road?

Sea toll road is the established route in which big vessels sail, connecting major ports in Indonesia. These ships will sail their own route, which spans from Sumatra to Papua.

Shipping routes and determined location points will make freight transportsimilar with cars passing through toll roads. 

Ships will not be empty after unloading cargo. Transportation Minister Budi KaryaSumadi has promised to encourage agricultural business owners in Eastern Indonesia to increase their productivity.

"We are trying to push agricultural business from Eastern Indonesia to produce goods to be sold in Western Indonesia," said Budi Karya as quoted from "Kompas.com" at Hotel Indonesian Kempinski Ballroom, Jakarta, Wednesday (November 9, 2016).

According to Transportation Ministry, as many as 24 ports will be involved in the sea toll road project. Five ports will be designed as hubs, namely Port of Belawan/Kuala Tanjung, Port of TanjungPriok/Kalibaru, Port of Tanjung Perak, Port of Makassar, and Port of Bitung.

Moreover, other 19 ports will function as feeders to hub ports, such as Port of Malahayati, Batam, Jambi (TalangDuku), Palembang, Panjang, TelukBayur, TanjungEmas, Pontianak, Banjarmasin, Sampit, Balikpapan/Kanangau, Samarinda/Palaran, Tanau/Kupang, Pantoloan, Ternate, Kendari, Sorong, Ambon, dan Jayapura.

Three categories of vessels will be operated. The first category is vessels with 15,000 to 40,000 deadweight tonnage (DWT) and 1,000 to 3,000 twenty-foot equivalent unit (TEU) cargo capacity.

The second category is pioneer ships with 208 TEU capacity, while the third one is passenger ships.

From 2015 to 2019, about 46 ships of 1,000 TEU capacity are set to be operated, as well as 37 ships of 3,000 TEU capacity and 26 pioneer ships. In addition, there will be 500 passenger ships by 2019.

These efforts to improve logistics will not only lower fuel price in Papua to the same level as fuel price in the island Java, but also other commodity prices in numerous areas.