The Oil and Gas Regulatory Authority (OGRA) has clarified that it has issued only construction licenses for storage to intending new oil marketing companies strictly as per the applicable rules and policy of federal government, in accordance with its objective to increase private investment.
Regarding the news reports in the print and electronic media regarding issuance of 21 licenses to establish Oil Marketing Companies (OMC) in last six months, the OGRA clarifies that it has issued only construction licenses strictly. The country is currently in dire need of new oil storages due to drastic increase in demand of petrol and diesel since last few years. Further, only those companies will be allowed to market the product, which have completed the required storage, meeting all technical and other requirements as per rules.
In 2006, the government policy and criteria for establishing new OMC entailed an upfront equity of Rs 3 billion and investment of Rs 6 billion in three years and the criteria remained in field till 2010. Due to meager investment in storage facilities and to encourage new investors for development of storage infrastructure in the country, the government relaxed the policy in 2010 with Rs 100 million as equity and investment of Rs 500 million in three years.
Since July 2016, the OGRA has granted 21 licenses for construction of oil storage infrastructure to the companies namely: Best Petroleum Private Limited, Oil Industries Pakistan Private Limited, they have the storage facilities in place. In addition, they are restricted to operate a specific number of retail outlets to be opened based on their available storage capacity.
Since July 2016, 4 companies namely: Petro Well Private Limited, Kepler Petroleum Private Limited, Z&M Oil Private Limited & Outreach Private Limited were granted marketing licenses after completion of satisfactory storage facilities. However, they are bound to restrict marketing activities to the extent of province/area, where they have the storage facility.
The storage construction is a gradual process and time is needed to materialize such projects, as the same involves procurement of land, resources, material, obtaining of No Objection Certificates (NOCs), construction of works i.e. civil, mechanical and electrical followed by Third Party Inspection to ensure compliance with technical standards before granting permission to operate. On account of they have the storage facilities in place. In addition, they are restricted to operate a specific number of retail outlets to be opened based on their available storage capacity.
Since July 2016, 4 companies namely: Petro Well Private Limited, Kepler Petroleum Private Limited, Z&M Oil Private Limited & Outreach Private Limited were granted marketing licences after completion of satisfactory storage facilities. However, they are bound to restrict marketing activities to the extent of Province/Area, where they have the storage facility.
The storage construction is a gradual process and time is needed to materialize such projects, as the same involves procurement of land, resources, material, obtaining of No Objection Certificates (NOCs), construction of works i.e. civil, mechanical and electrical followed by Third Party Inspection to ensure compliance with technical standards before granting permission to operate. On account of strict monitoring by OGRA, the industry has added 140,347 M. tons of storage both for MS and HSD in the system with the approximate investment of Rs 14.4 Billion since the transfer of regulatory functions to OGRA from Ministry of Petroleum & Natural Resources.
