Govt to bring new criteria for issuance of POL marketing licenses

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ISLAMABAD: The government is likely to change the existing criteria for the issuance of marketing licenses of petroleum products (POL), it was learnt on Tuesday.

Sources said that the Petroleum Division proposed the new criteria for issuance of POL marketing license as the existing marketing plan only covered the urban areas.

The newly proposed marketing plan envisaged that the prospective company shall be obligated to set up minimum 10pc of its expected retail population to serve remote and far-flung areas in accordance with specific regulations in the matter to be declared by OGRA.

Similarly, the infrastructure development plan should be based on province-wise regional demand with details of installations/storages/terminals at different locations/depots and capacities corresponding to the business strategy.

The new company must construct minimum storage of 20,000 metric tonnes each of HSD/MS or storage equivalent to 20 days of annual average sales of the first year, whichever is higher, prior to the beginning of sales in the country.

Similarly, it has also been proposed the company dependent on import sources shall create adequate storage terminal facilities at ports.

The division has proposed that under the financial capability, the prospective company shall make an investment equivalent to Rs6 billion or more in infrastructure over a period of 3 years with a minimum upfront equity equivalent to Rs3 billion in the shape of paid-up-capita and it has also been proposed to limit the marketing licenses up to three years.

Sources said that the government had introduced the existing criteria in 2003 and at that time, the annual exchange rate was Rs57 per dollar but now it has surged to Rs136.

In addition, sources said that average storage construction cost per ton has increased from about Rs50,000 in 2003 to more than Rs100,000. This demands a corresponding increase in the investment requirements for the new marketing companies, therefore, the investment in infrastructure is being asked to revised/increased equivalent to Rs500 million.

Sources said that the total numbers of companies with marketing licenses presently stand at 59 and under the existing criteria, 53 new companies have been granted marketing licenses.

The Petroleum Division secretary remained oblivious to the new proposed criteria, saying, “It must have been proposed before my joining; I can check and revert.”

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