By: Andreas Rae Johanes

On 29 December 2017, Minister of Energy and Mineral Resources enacted the Minister of
Energy and Mineral Resources Regulation No. 58 of 2017 concerning the Selling Price of
Natural Gas Through Pipelines on the Downstream Business Activity of Oil and Natural Gas
(“MR 58/2017”). The said regulation is made to carry out the provision of Article 72 of
Government Regulation No. 30 of 2009 concerning the Amendment of Government
Regulation No. 36 of 2004 concerning the Downstream Business Activity of Oil and Natural
Gas.
Article 3 of MR 58/2017 regulates the selling price of natural gas on the downstream
sector, which are the selling price of the natural gas for electrical power and industry, the
household and small customer, and the transportation fuel. MR 58/2017 does not
determine the formula to calculate the selling price of natural gas for household and small
customer and the selling price of natural gas for transportation fuel, but rather only
determine the selling price of natural gas for electrical power and industry. Pursuant to
Article 4(2) of MR 58/2017, the formula to determine the selling price of natural gas for
electrical power and industry is the price of natural gas plus the infrastructure
management cost plus the commercial fees. Based on Article 11 of MR 58/2017, the selling
price of natural gas for household and small customer is set forth by the governing body,
while the selling price of natural gas to supply for transportation fuel is set forth by the
Minister (Article 13 of MR 58/2017).
Every business entities that holds the oil and natural gas trading business permit shall
adjust the selling price of natural gas which has been set no later than 18 months (Article
15, 17, 19, and 27(1) of MR 58/2017. Every business entities shall also provide monthly
report on the adjustment of the selling price of natural gas on the downstream sector
(Article 21, 22, and 23 of MR 58/2017).
If there is a business entity that does not implement the said provisions, Article 25(2) of
MR 58/2017 determines that such business entity will be imposed to administrative
sanctions in form of written warning, temporary suspension of activities, and/or
revocation of business permit. The sanctions will be given in stages started from written
warning for a maximum of 1 (one) month, if such business entity still does not carry out
their duty, the Director General will impose an administrative sanction in form of
temporary suspension of activity for 3 (three) months. In case that the business entity still
does not carry out their duty, the Director General on behalf of the Minister will revoke the
permit.