Downstream Fuel Oil Distribution

The Minister of Energy and Mineral Resources has issued Regulation No. 16 of 2011 on the Distribution of Fuel Oil (“Regulation”) to provide legal certainty about fuel distribution activities and ensure the smooth distribution of fuel oil throughout the country. The Regulation is also aimed at ensuring that the distribution of subsidized fuel is implemented appropriately and not misused.

Article 1 defines key terms that are used throughout the Regulation.  Pursuant to Article 1 (5), “Distribution Activities” are fuel oil distribution activities undertaken by a supplier under a cooperative agreement with a General Commercial Business License Holder (Badan Usaha Pemegang Izin Usaha Niaga Umum/  BU-PIUNU). A “BU-PIUNU” is a business entity that has obtained a business license to conduct general commercial fuel oil business activities in accordance with the laws and regulations (Article 1 (4)). A General Commercial Business Activity (Wholesale) is the sale, purchase, export, and import of fuel oil, gas fuel, and/or other fuel that is processed on a large-scale by an actor that controls or has the facilities and means to store fuel and the right to supply it to all users under a particular trademark (Article 1 (1)). “Certain Types of Specific Oil Fuel” are fuels that originates and/or are processed from oil that has a specific type, standard quality specification, price volume, and specific customer (Article 1 (3)).