The Indonesian Government, through the Ministry of Energy and Mineral Resources (“MEMR”), recently announced a new policy on the importation of fuel oil (“BBM”). Under this policy, all fuel imports must be conducted exclusively through PT Pertamina (Persero). This effectively requires private companies in need of imported fuel to purchase it from Pertamina.
The policy raises questions from both legal and business perspectives, as it appears not entirely consistent with the existing regulatory framework governing downstream oil and gas activities in Indonesia.
Applicable Regulatory Framework
The framework for fuel imports in Indonesia is set out under Presidential Regulation No. 191 of 2014 on the Supply, Distribution and Retail Price of Fuel Oil, as last amended by Presidential Regulation No. 117 of 2021 (“PR 191/2014”). Under PR 191/2014, business entities appointed to supply and distribute certain types of fuel may import fuel if domestic refinery production is insufficient to meet national demand. Such imports require a recommendation from the MEMR and a license from the Minister of Trade.
MEMR Regulation No. 18 of 2021 on the Prioritization of Crude Oil Utilization for Domestic Needs (“MEMR Reg 18/2021”) sets forth additional requirements. Article 2 of MEMR Reg 18/2021 requires PT Pertamina (Persero) and business entities holding oil processing licenses to prioritize sourcing crude oil supplies domestically. Before pursuing imports, Pertamina and other licensed entities must first seek supplies from domestic contractors. In other words, imports should only be considered as a last resort once all domestic supply options have been exhausted.
Taken together, these regulations essentially allow more than one business entity to engage in fuel imports, provided they meet the necessary licensing requirements. This underscores that Indonesia’s downstream oil and gas sector adheres to an open system or liberalized model, where qualified business entities may participate in the importation, distribution and marketing of fuel.
Clarifications from the Government and Pertamina
In response to the controversy, the MEMR clarified that the single-gateway import policy through Pertamina applies only if domestic fuel stocks are genuinely insufficient. The MEMR further noted that the policy was temporary, applicable only until the end of the current year, given that import allocations for private fuel retailers had already been determined at the beginning of the year.
The President Director of PT Pertamina (Persero) also emphasized that there was no permanent single-gateway policy for fuel imports. Rather, the arrangement applies only to additional import quotas in cases where other business entities cannot meet urgent demand.
Legal and Business Implications
From a legal standpoint, the single-gateway policy raises concerns regarding legal certainty and fair competition. Legal certainty may be undermined if temporary policies are perceived as conflicting with existing regulations. It is therefore crucial for the government to ensure alignment between practical policy measures and the prevailing regulatory framework. At the same time, channeling imports through a single gateway risks weakening competition in the downstream oil and gas sector, as it appears inconsistent with the open system or liberalization principle that underpins the sector’s regulatory regime.
That said, when viewed through the lens of national energy security, the policy may be seen as a strategic measure to safeguard supply and stabilize prices in the face of global uncertainty.
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