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September 25, 2019

Ogra bars oil firms from opening new retail outlets


September 25, 2019

KARACHI: Oil and Gas Regulatory Authority (Ogra) has restricted a number of oil marketing companies (OMCs) from opening any further retail outlets without first ensuring required storage facility.

Ogra decided to restrict 31 OMCs from expansion of their retail network in such areas where they have low storage capacity than required till the construction of backup storage capacity. “Ogra has restricted oil marketing companies for addition of further retail outlets without having requisite backup storage infrastructure,” Ogra said in a public notice last week.

The decision was taken to ensure that number of retail outlets of OMC might not outpace their required storage capacity. There are more than 8,000 OMCs retail outlets operating in the country, Ogra said in annual report 2017/18.

“No entity is allowed to establish, construct any retail outlet against the aforementioned directives at present, till further orders and approval, in writing, from Ogra,” the notice added. Ogra stopped Byco Petroleum Pakistan, Puma Energy Pvt Ltd, Askar Oil Services Pvt Ltd, Zoom Petroleum Pvt Ltd, Exceed Petroleum Pvt Ltd, Petrowell Pvt Ltd, Kepler Petroleum Pvt Ltd and Al Noor Petroleum Pvt Ltd from expanding their retail network across the country.

Ogra further directed Pakistan State Oil Company Limited (PSO), Shell Pakistan Limited, Total Parco Marketing Limited, LaGuardia Petroleum Pvt Ltd and Taj Gasoline to stop expansion of retail outlet network across the country except Sindh. Several other OMCs have been restricted from expanding in the country except Punjab.

Oil marketing companies are obligated to construct and maintain oil storage capacity of minimum 20 days of their respective sales.

In January 2017, Ogra also restricted 13 OMCs from expanding their retail network in January 2017. Of which PSO, Shell and Parco were allowed to expand only in Sindh. The official said the country’s consumption of petroleum products is increasing every year without proportionate increase in outlets and storage.

Though sales of petroleum products sharply dropped one-fourth last fiscal year, petrol sales showed an upward trend. Motor spirit was the only product that registered positive growth of one percent in FY2019 against an average growth of nine percent over the past 20 years.

High speed diesel sales slid 19 percent in FY2019, truly depicting the economic conditions in the country. Industry officials said restricting development of retail sites in newly developed areas is causing inconvenience to public as well as the marketing companies and hampering improvement in service standards.

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