Complete Blockage of Illegal Duty-Free Fuel Distribution... Introduction of 'Fixed Quantity Supply System' for Ship Fuel

Cabinet Meeting Passes Amendment to 'Port Transportation Business Act'
Ship Fuel Suppliers Must Equip Measurement Devices
Business Area Restrictions Lifted... Regulatory Relaxation Promoted
Reviewing Permission for Mobile Refueling... Scaling Up Bunkering Vessels

The government is introducing a fixed-quantity supply system to block the illegal distribution of duty-free fuel for domestic ship fuel.

The Ministry of Oceans and Fisheries announced on the 12th, following a Cabinet meeting, that a partial amendment to the "Port Transportation Business Act," which centers on supplying ship fuel in fixed quantities to eradicate the chronic illegal distribution of duty-free fuel in the domestic ship fuel supply industry, has been passed.

The Ministry explained that, unlike on land, the domestic ship fuel supply industry lacks a systematic quality control system such as the installation of measuring devices, resulting in frequent disputes over supply quantities and illegal distribution of duty-free fuel. According to Article 18 of the current Individual Consumption Tax Act and Article 15 of the Transportation, Energy, and Environment Tax Act, ship fuel supplied to foreign-going vessels is provided duty-free. The Ministry pointed out that the widespread illegal distribution of duty-free fuel is one of the factors lowering the external credibility of Korea's ship fuel supply industry.

[Image source=Yonhap News]

The amended Port Transportation Business Act includes measures requiring ship fuel suppliers to equip supply quantity measuring devices and supporting documentation to fundamentally block illegal duty-free fuel. Additionally, the Korea Petroleum Management Service will conduct random sample inspections on fixed-quantity supply to enhance reliability.

The amendment also includes the removal of restrictions on the business area for fuel supply via existing tank lorries. Under the current Port Transportation Business Act, ship fuel suppliers can only operate at registered ports, but in the future, business activities will be possible at ports nationwide. This is a measure to flexibly respond to regional demand for eco-friendly fuels such as at shipyards and government vessels.

The Ministry is also pursuing a plan to allow mobile refueling, which has been restricted until now, through a pilot project. Mobile refueling refers to allowing one ship fuel supply vessel to refuel only one foreign-going vessel at a time. This was introduced to strictly manage duty-free fuel for foreign-going vessels and prevent fuel suppliers from fraudulently claiming duty-free status to evade taxes.

Oil tanker loading GS Caltex export products

The government’s position is that, after calculating appropriate transportation fees for fuel supply (bunkering) vessels and if the fixed-quantity supply system settles successfully, mobile refueling could be permitted under the Customs Service’s management. Allowing multiple vessels to be supplied fuel per trip under fixed-quantity supply could lead to the scaling up of bunkering vessels. Alongside this, separate legal support will be established to enable fuel supply vessels to receive financial support from the Korea Ocean Business Corporation, promoting both quantitative and qualitative growth of the ship fuel supply industry.

Cho Seung-hwan, Minister of Oceans and Fisheries, said, "The introduction of the fixed-quantity ship fuel supply system is expected to not only foster growth in related industries but also significantly strengthen the international competitiveness of Korea’s trade ports." He added, "The fixed-quantity supply system is essential for securing a leading position in the eco-friendly ship fuel supply industry in the future."

This content was produced with the assistance of AI translation services.