Govt. Expedites the Implementation of the National Single Price for Fuels

In order to realize the equal distribution and sale of gas oil, kerosene and RON 88 gasoline (“Fuels”) throughout Indonesian territory, the Ministry of Energy and Mineral Resources (“Ministry”) has issued Regulation No. 36 of 2016 on the Accelerated Implementation of the National Single Price for Certain Types of Oil Fuel and Types of Specially-Assigned Oil Fuel (“Regulation 36/2016). Regulation 36/2016 sets out provisions which relate to the determination of fuel prices and the appointment of designated business entities to supply and distribute the Fuels in question, as well as various administrative sanctions for non-compliance.Distribution of Fuels and Fuels PriceThe distribution of Fuels is to be undertaken by Designated Business Entities appointed by the Downstream Oil-and-Gas Regulatory Agency (BPH Migas). These Designated Business Entities will then appoint cooperative, small-level businesses and/or other Indonesian private businesses as the distributors (“Distributors”) who are responsible for supplying the Fuels in question. [1] The Director General of Oil and Gas will determine a list of areas where Distributors have never been appointed (i.e. remote areas, border areas, etc.). Any Designated Business Entity which is obliged to supply Fuels to such areas must appoint new Distributors which will dispense the Fuels. Note that, such Distributors are exempt from any distribution costs and are eligible to apply higher distribution fees (margin fees) to the Designated Business Entity in comparison with other Distributors. [2] Any Designated Business Entity which is obliged to distribute Fuel in the abovementioned areas must sell said Fuels at a price which is set by the Ministry. Furthermore, any such Designated Business Entity is also obliged to establish a supply and distribution facility as well as relevant infrastructure. [3] Non-ComplianceNon-compliance with the above policy by any Designated Business Entity will result in several forms of administrative sanction being applied, as detailed in the flowchart below: [4] Regulation 36/2016 has been in force since 1 January 2017._MS