Document ID: chunk:federal_register_of_legislation:F2021N00170:reg:5
Version: federal_register_of_legislation:F2021N00170
Segment Type: reg
Provision Reference: reg 5
Character Range: 2002–4377

5  Objective
 (1) Under subsection 43(5) of the Act, the key considerations for determining the calculation method for fuel security services payments are:
 (a) the determination by the Minister under subsection 44(1) of the Act that 6.4 cpl is, at the time of that determination, the margin sufficient to ensure that refineries operating in Australia over the period starting on 30 June 2021 and ending on 30 June 2027 do not make a loss; and
 (b) the principle that (subject to the cap of 1.8 cpl) the amount of fuel security services payment paid to a person for quarters ending in the person's commitment period should be guided by the margin that is sufficient to ensure that refineries operating in Australia over the person's commitment period do not make a loss.
 (2) Under subsection 43(6) of the Act margin is defined as the excess of the sale price of FSSP fuels and fuel oils refined by the refineries over the costs of feedstock and transport in relation to FSSP fuels, expressed in cents per litre. Subsection 43(7) of the Act sets out the following matters relevant to the refinery's margin for a period:
 (a) government payments and benefits other than fuel security services payment in relation to the period;
 (b) costs of operating the refinery incurred in relation to the period;
 (c) capital expenditure in relation to the period;
 (d) any other matters the Minister considers relevant.
 (3) The considerations are to be given effect by calculating a single rate of fuel security services payment for each litre of FSSP fuel refined at a committed refinery in a quarter based on a margin marker calculated for the quarter for each committed refinery. The basis for the margin marker is set out in Part 3 of this instrument.
 (4) The fuel security services payments are intended to address refinery operators' downside risk of losses during a quarter in their commitment period, but are capped at 1.8 cpl under paragraph 43(2)(a) of the Act. Therefore:
 (a) a margin marker of 6.4 cpl is the collar when payments start to be made; and
 (b) at a margin marker of 4.6 cpl the payments are capped at 1.8 cpl.
 (5) Under subsection 43(4) of the Act, the Minister must take these guidelines into account in making rules for subsection 43(1) of the Act to prescribe the calculation methods for fuel security services payment for a quarter.
Part 3—Margin Marker