The Blasts of Subsidized LPG Case: Law and Its Enforcement


Introduction

The kerosene to liquefied-petroleum-gas (LPG) conversion program was initiated by Indonesian government in 2006-2007. The program was intended to reduce the government’s energy subsidies by replacing household kerosene cooking fuel with LPG. PT. Pertamina (Persero) was appointed in charge for public service obligation (PSO) to do the conversion program for household. This conversion program succeeded seeing majority of Indonesian households have changed the usage of kerosene into LPG as cooking fuel within only 2 years. The problem came later from major usage of LPG. Some explosions of the 3 kg LPG in Indonesia happened, endangering many households as its major user.

Before the kerosene-LPG conversion program run, majority people in Indonesia used kerosene in their daily life, mostly, for cooking and lighting. In 2007, kerosene was a majority of subsidized fuel for household, reaching volume of 9.9 million kiloliters per year or value of 37 trillion rupiahs in 2007 . Since government subsidized only household kerosene for cooking, many industries substituted unsubsidized industry kerosene to the subsidized one. Big price gap between them made industry, unlawfully, use the subsidized one. World oil price increase in 2006-2007 made subsidy for kerosene raised unreasonably. This subsidy became burden as it is expensive for the government and eating up significant portions of the government budget.

On the other side, before the conversion program run LPG energy was not common for Indonesian people. It was used by only 10 percent of Indonesian household. Previously, smallest unit of 12 kg LPG canister was considered expensive relative to kerosene. When the program run, smaller unit of 3 kg LPG canister is introduced and subsidized by government.

The conversion program converted 10 million kiloliter of kerosene into 5 million kiloliter of LPG. This change made government saved 12 trillion rupiahs subsidy per year. Pertamina distributed conversion kits to households, comprising one 3-kilogram gas canister, a stove, a hose and a regulator. From 2007 until now, estimated 44,8 million conversion kits have been delivered and there will be total 52 million packages until the end of 2010.

Disaster Events

The problem started to happen in 2008, many 3 kg LPG canisters was starting to blast in many households until now. Gas leakage from the canister happens unnoticed and flows to kitchen with bad ventilation. The leakage makes gas accumulated and potentially flammable. When stove is switched on, LPG vapor blasts accidentally, makes people injury and burns down building structures.

Public Policy Study Center (PUSKEPI) recorded 189 accidents of LPG blasts from 2008 to 2010, 61 cases happened in 2008, 50 cases happened in 2009, and 78 cases happened in 2010. National Consumer Protection Agency (BPKN) version mentioned that as of the end of June there had been 95 explosions, 22 deaths, 131 people hospitalized for injuries and 55 houses damaged in gas explosions. The incidents mostly occurred in Jakarta, Greater Jakarta and West Java.

The Causes and Follow-ups

Investigation of LPG blast accidents found some leads that may caused the accidents. First suspect is that some parts of the LPG canister and accessories do not comply with Indonesian National Standard (SNI). National Standardization Agency of Indonesia (BSN) has put five SNI standards regarding LPG canister and its accessories. Pertamina subcontracted LPG canister production to many local manufacturers and imported the rest from other countries. All manufacturers should comply with SNI standards in manufacturing products. Hose, regulator, and rubber seal are vulnerable to LPG leakage and may lead to accidents. Therefore, these parts should be manufactured well and checked regularly. A study conducted by BPKN reveals that all hoses, two-thirds of the canister check valves, half of the stoves, 20 percent of the regulators and 7 percent of the canisters did not meet safety standards. Polda Metro Jaya has sealed one of LPG manufacturing companies in Tangerang which produced two hundred thousands of non-SNI LPG canisters which has below standard quality.

Second suspect is smuggled non-standard LPG canisters which do not comply with SNI. Currently, police has caught some LPG dealers because they sold fake and non-SNI LPG canister. Associations of Steel Canister Industry (ASITAB) pointed out there are 20 million non-SNI LPG canisters in the current market out of 80 million total quantities. Some trace found that the non-SNI LPG canisters are imported from China. Beside smuggled products have less quality and safety features, ASITAB also complained about aggressive pricing from these smuggled products.

Third, government and Pertamina failed educate and socialize how to use LPG as cooking fuel to public. Public education for using LPG is very important to prevent accident. Public needs training about few crucial actions as a precaution safety. How to check LPG canister from purchased first time how to install and check hose and regulator in regular basis are very important to prevent accident. According to Secretary of the Coordinating Minister for People’s Welfare, Indroyono Soesilo, LPG hose should be replaced once a year, but since no education from 2008, they have not been replaced them properly and made potential disaster each usage. Less knowledge of LPG users was used by Pertamina as an argument explaining the cause of many LPG blasts nowadays.

Fourth, rubber seal is broken because there are some crime practices of injecting LPG from subsidized 3 kg LPG to unsubsidized 12 kg canister. Price disparity is very high so that some companies illegally injecting 3 kg subsidized to 12 kg unsubsidized LPG canisters. Up to four 3 kg LPG canister cost only Rp 52.000 can be injected to one 12 kg LPG canisters cost Rp 75.000. Police has caught a company in Bantar Gebang injected 3 kg LPG to 12 kg LPG up to four thousands cycles per day and generating profit up to 4 billion rupiah per month.

Blasts of subsidized LPG in Indonesia have made a lot of victims and loss. Investigation has been held by government to find out the real problem with LPG conversion program. There are several steps done by government and Pertamina to settle this problem. Government has plans to withdraw 9 millions broken or non-SNI LPG canisters. As mentioned before, non-SNI canisters have larger risks for household cooking. In June, Pertamina started to gather fund for a compensation program for victims of the 3 kg canister explosions. Those who suffered permanent injury or the beneficiaries of dead victims received Rp 25 million.

Law and Enforcement

There are some point to be discussed from view of law and its enforcement. Government and Pertamina as its appointee in the LPG conversion program should be responsible for accidents involving LPG. Some laws are violated and potentially will have legal risks which will cause large financial and reputation loss.

Pertamina may get many civil suits regarding these series of accidents. Most significant one, Pertamina has violated the consumer law by endangering its consumers with life-threatening product. With hundreds of victims related to LPG accidents, there might be class action for this violation. Referring to UU no. 8/1999 about Consumer Protection Law, there is some consumer rights that violated by Pertamina, which are:

Article 4

(a) Right to get comfort, secure, safety in consuming products and/or services

(f) Right to get guidance and consumer education

(h) Right to obtain compensation, restitution and / or replacement, if the goods and/or services received are not in accordance with the agreement or not as properly;

Therefore, Pertamina should respond by immediately fulfill consumer right to prevent these legal actions. The most important and urgent one is to ensure withdrawal and replacement of the low quality canister done accordingly. It is also important and urgent to ensure all of the victims, injured or death, to get full treatment and compensation.

In longer term, Pertamina should conduct consumer guidance and education, considering LPG as potentially dangerous technology and subsidized LPG user which has low level education. LPG station, which has duty to distribute gas through its agents, should play as Pertamina educator and information provider to the public. Pertamina can ask help from government in term of budget and authority because government also has responsibility in these accidents.

Indonesian law might be sufficient to respond to LPG blast case, but government must be able to enforce it. Manufacturers, distributors and users who commit crimes and violations related to LPG blast accidents should be punished. One of the most important points is that LPG gas canister and its accessory products in the market should comply with SNI standards. There should be official sweeping to local market to see whether distributors provide product with SNI Standards. LPG hose and regulator as the most frequent problem should be checked carefully.

As many fake or smuggled LPG and related products came from abroad, customs should check more carefully in the point of entrance. ASITAB claim that 20 million out of 80 millions 3 kg LPG canister non-SNI in Indonesia should be verified. The information to distinguish whether LPG canisters and accessories original or not should be distributed to police and public. Any distributors sell fake or smuggled product are violated UU no.8/1999, “the right to correct information, clear and honest about the condition and security of goods and/or services” and therefore government should revoke its business permit and punish it according its violations.

As many crimes regarding injecting of subsidized 3kg LPG to unsubsidized 12 kg cannister, police should arrest the criminal actors. This actors can be treated in criminal articles in  KUH Pidana. Mainly, the most potential party who commit this  kind of crime is LPG agent in local area. As a prevention, local police and  LPG station can cooperate together to conduct counseling to local agent regarding injecting subsidized LPG to unsubsidized one.

Conclusion

As a conclusion, LPG blast accidents happened because of current products of LPG canister and accessories do not comply with Indonesian National Standard (SNI), smuggled products fulfill the market, lack of education and information to consumers, and crime of injecting subsidized LPG into nonsubsidized cannister.

Pertamina has violated law by endangering consumers with life-threatening product. Therefore, Pertamina should respond by immediately fulfill consumer right to prevent these legal actions. Government as regulators should enforce the law related to this case. Product should be comply with SNI and fake or smuggled product should be forbidden. Government should prevent and punish actors and potential actors who will violate law and/or commit crimes regarding these LPG blast accidents.

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