Govt notifies revised oil licensing and fee structuring rules

The dispute had raged on since an out-of-court settlement was reached in June last year between Ogra and Oil Companies Advisory Council (OCAC) over the licensing and fee structure conditions

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ISLAMABAD: A two-year-old saga between the Oil and Gas Regulatory Authority (Ogra) and oil industry over licensing and fee structure came to an end on Friday, after the government revised the Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016.

The dispute had raged on since an out-of-court settlement was reached in June last year between Ogra and Oil Companies Advisory Council (OCAC) over the licensing and fee structure conditions, reported Dawn.

However, the oil industry refused to pay the annual fee on the failure of Ogra and the government failed to publish a notification or a statutory regulatory order (SRO) to codify the agreement since June last year.

After a year of being at loggerheads, the dispute finally concluded by the government’s issuance of a formal SRO on Friday before the end of the outgoing financial year 2018 on June 30th.

As per the SRO notification, Ogra is going to retrieve a yearly fee of around Rs170 million which includes a one-time licence fee of approximately Rs50 million beforehand.

Under the revised rules, the licence term for all oil-linked companies would be doubled from fifteen to thirty years and a fee of Rs2.5 million per licence would be charged.

However, annual fee structure would be contingent on throughput sales and market size.

As per the newly revised rules, firms regardless of their sales and size would be required to pay a fixed licence fee of Rs2.5 million and duration of licence would be increased to thirty years from 15 years instead.

Also, it would be mandatory for all entities to pay a fixed annual fee unlike the previous 0.005 percent of their sales.

As a result, the country’s largest oil marketing company (OMC), Pakistan State Oil (PSO) would be liable to pay the highest yearly fee of Rs24 million.

Those OMCs having a throughput of more than 16 million tons would need to pay Rs24 million, which will be billed at Rs22 million for yearly throughput of 14-16 million tons.

This yearly fee for OMCs would slowly be decreased by Rs2 million each for yearly throughput of two million tons each.

Smaller firms having less than 1 million tons throughput would be required to pay a yearly fee of Rs3 million.

And refineries having a throughput of 6 million tons or over would be liable to pay Rs11 million yearly fee which would slowly be decreased by Rs2 million each for every 2 million tons lesser throughput.

For pipeline companies, their annual fee would stand around Rs5 million having more than 6 million tons throughput and would be decreased by Rs2 million for two-million lower throughput.

The storage facilities yearly fee would be Rs100,000 and oil testing facilities would be charged at Rs500,000 annually.