Gov’t Stipulates New Formula on Fuel Prices

Director General of Oil and Gas of Ministry of Energy and Mineral Resources delivers press statement, Jakarta (10/2). (Photo by: Ministry of Energy and Mineral Resources’ Public Relations).

The Indonesian Government stipulates a new basic price formula in calculating the retail prices of fuel which distributed through public gas stations/boat gas stations, as a guideline for business entities to determine the prices.

The stipulation is carried out by implementing the provisions of Article 4 of Minister of Energy and Mineral Resources Regulation Number 34 of 2018 on the Fifth Amendment to Minister of Energy and Mineral Resources Regulation Number 39 of 2014 on Calculation of Retail Prices of Fuel, and Minister of Energy and Mineral Resources Decree Number 19 K/10/MEM/2019 on Basic Price Formula for Calculating Retail Prices of Gasoline and Diesel Fuel Which Distributed Through Public Gas Stations and/or Boat Gas Stations, which are effective since 1 February 2019. It is regulated as well that the prices of fuel determined by business entities must be reported to the Government.

“The policies are made to protect consumers as well as business entities to compete in a healthy and fair manner,” Director General of Oil and Gas of the Ministry Djoko Siswanto said in his press statement at Jakarta (10/2).

Moreover, Djoko said that the retail selling price is calculated using the formula of Retail Price = MOPS+constants+Margin+VAT(10 percent)+fuel tax (in accordance with provincial regulations), which constant consists of acquisition costs excluding product prices, storage costs, and distribution costs. The MOPS and the constant used are in accordance with the provisions of the Decree.

The determination of fuel retail selling price by business entities should also obey the provisions of price floor with 5 percent margin and price ceiling with10 percent margin.

Thus, the business entities can determine the retail prices of fuel within the range. “So that they no longer sell overpriced fuel. The Decree also regulates the price ceiling in order to protect the consumers,” Djoko added.

State-owned oil and gas company PT Pertamina has lowered their fuel price since 10 February 2019 midnight.

Several other private gas stations have also lowered their prices, such as Shell, Total, Vivo, and Aneka Petroindo Raya, while several others like AKR, Exxon and Garuda Mas Energy have not reduced their prices since they are still in accordance with the decree.

Under this Decree, hopefully the fuel prices will be more reasonable and fairer for business entities as well as the public. (Tim Komunikasi ESDM/EN)

Translated by: Galuh Wicaksono
Edited by: Mia Medyana