Fuel Industry Act 2020

The Fuel Industry Act 2020 has two main jobs. First, Parts 1 to 3 are aimed at promoting competition in engine fuel markets for the long-term benefit of end users. Secondly, Part 4 is aimed at promoting resilience of engine fuel supplies in New Zealand.

For business owners, that means this is not just a pricing law. It also deals with access to fuel at bulk storage facilities, transparency in wholesale arrangements, information disclosure, dispute resolution, enforcement and, for some participants, stockholding and supply resilience.

The Act binds the Crown and is administered by the Ministry of Business, Innovation, and Employment. It also gives important roles to the Commerce Commission and the chief executive responsible for administration, depending on which part of the Act is in play.

The Act uses defined terms, and those definitions matter. A fuel industry participant is a person that purchases, or sells and supplies, engine fuel other than as an end user or as an incidental part of hiring, leasing or selling motor vehicles. A reseller is someone who purchases, or intends to purchase, engine fuel from a wholesale supplier to sell and supply to another person, but not where that is only incidental to the business.

A retailer is a person carrying on a business of selling and supplying engine fuel to end users. A retail fuel site includes places such as petrol stations and truck stops, but not a bulk storage facility and not a place where the primary business is hiring, leasing or selling motor vehicles.

The Act also says it does not apply to certain reserve fuel imported by the Crown, or under an agreement with the Crown, for reserve fuel stock, and it does not apply to activities or persons in respect of that fuel.

One of the Act’s most practical features is the terminal gate pricing regime. It applies to a wholesale supplier that has a right to draw specified engine fuel at a bulk storage facility as owner or co-owner of the fuel, and to a reseller. The specified fuels include regular grade petrol, premium grade petrol and diesel, with scope for regulations to include or exclude other fuels.

A wholesale supplier must publicly post a terminal gate price for each specified engine fuel it has the right to draw at a bulk storage facility. A reseller may request same-day supply at that terminal gate price, in line with any regulations. If the request is made properly, the wholesale supplier must supply at that price unless it has reasonable grounds to refuse.

This can affect day-to-day supply planning. A wholesaler cannot simply rely on informal practice or private preference if the Act gives a reseller a right to request supply. A reseller should also make sure its request process, transport arrangements and payment position are in order.

The Act limits when a wholesale supplier can refuse a same-day supply request. The listed grounds include where the requested amount is below a prescribed minimum purchase amount, where the supplier reasonably believes the reseller cannot comply with prescribed terms and conditions, where the reseller cannot safely receive or transport the fuel, where the reseller is unlikely to pay, or where the supplier needs the fuel for certain existing obligations or forecast retail demand.

That matters because a refusal cannot be based on a vague commercial preference. The supplier should be able to point to one of the Act’s recognised grounds and, where required, provide or publish a notice. The Act also limits reliance on one of the supply-priority grounds in relation to independent resellers during a prescribed period, except beyond a prescribed minimum supply amount.

For both sides, this is a records issue as much as a legal issue. If a request is refused, the reasons, supporting facts and any required notices should be documented carefully.

The Act also regulates fixed wholesale contractual terms. The contents list shows rules about transparency, transparent pricing, termination rights for certain fixed wholesale contracts, limits on exclusivity and terms that limit a reseller’s ability to compete. Those rules are commercially important because they can affect how long a reseller is locked in, how much of annual fuel requirements can be tied up, and whether a contract term is enforceable at all.

If a dispute arises between a wholesale supplier and a reseller from the performance or non-performance of a duty, or the exercise of a right, under the terminal gate pricing or fixed wholesale contract parts of the Act, the dispute must be referred to mediation if it cannot be resolved by agreement. If mediation does not resolve it within the prescribed timeframe, either party may refer the dispute to arbitration, and the Arbitration Act 1996 applies.

For a small operator, this means contract disputes may not go straight to court. Your contract management process should allow for mediation and preserve the documents needed to support your position.

The Act creates information disclosure obligations in two areas. Under Part 2, fuel industry participants must comply with prescribed consumer information and information disclosure requirements. Under Part 4, fuel industry participants covered by regulations must comply with resilience-related information disclosure requirements to the chief executive.

Part 4 expressly allows regulations to require record keeping, retention and disclosure of information about fuel stocks, international supply chains, contingency arrangements such as compliance plans, and other information needed for planning and implementing the stockholding obligation. Regulations may also require information to be independently assessed for accuracy and certified by an auditor approved by the chief executive.

This means compliance is not just about having the right answer once. It is about having a repeatable system for collecting, retaining and disclosing information in the required form and manner. If your business is in scope, weak records can become an enforcement problem even before any supply issue arises.

Part 4 adds a resilience framework. Its purpose is to promote resilience of engine fuel supplies in New Zealand. The official text confirms that the Act identifies persons to which the stockholding obligation applies, the fuel on which the obligation is based, disregarded fuels, exemptions, entitlement agreements, review requirements, information disclosure and pecuniary penalties.

A practical point is that compliance may not always depend on physical ownership alone. The Act recognises entitlement agreements, which transfer the right to count an amount of fuel stocks for compliance purposes. Only the transferee is treated as the holder of that stock for counting toward the stockholding obligation after the transfer.

The Act also allows exemptions in some circumstances and includes a transitional pathway where an obliged person cannot comply within the first two years because of circumstances beyond its reasonable control despite best endeavours. In that case, terms and conditions such as a compliance plan may be submitted to the chief executive and, if accepted, treated as an enforceable undertaking.

The Act has real enforcement teeth. It provides for pecuniary penalties, compensation orders, injunctions and court proceedings. It also creates offences linked to certain Commerce Act notice and investigation processes, including refusing or failing to comply without reasonable excuse, providing false or misleading information, obstructing Commission staff, attempting to deceive or knowingly mislead the Commission, or refusing to appear, answer questions or produce required documents.

For offences under section 42, the official text states that an individual is liable on conviction to a fine not exceeding $100,000 and any other person to a fine not exceeding $300,000. For Part 4 contraventions, the High Court may order significant civil pecuniary penalties, including up to $100,000 for an individual and, for others, the greater of $5 million, three times commercial gain if readily ascertainable, or 10% of turnover in each accounting period in which the contravention occurred.

There are also limitation periods. Civil proceedings generally must be commenced within 3 years of discovery and no later than 10 years after the matter giving rise to the contravention. That makes long-term record retention important.