ISLAMABAD - The federal government Monday imposed moratorium on the establishment of new oil marketing companies (OMC).

A new criteria was being finalised for establishment of oil marketing companies (OMCs) and till its approval, a moratorium would remain in place for new set up of OMCs, said spokesman Oil and Gas Regulatory Authority (OGRA) here. According to the spokesman, the general Public, consumers and all stakeholders are informed that Ministry of Energy (Petroleum Division) (MEPD) is in the process of revising the criteria for establishment of oil marketing companies (OMCs) for which a draft summary has been forwarded to the concerned organizations.

In this connection, Petroleum Division has imposed a moratorium on applications for establishment of new OMCs by local investors with effect from January 9, 2019, till the new criteria is approved by the Economic Coordination Committee (ECC) of the Cabinet. The petroleum division has advised OGRA not to accept any new applications from local investors except foreign investors for issuance of license in the intervening period.

It is pertinent to mention here that in a span of six months (from July to December 2016) OGRA had issued record 21 fresh licenses to OMCs and the volume was much higher as compared to previous issued licenses.

Soon after the bulk issuance of licenses for the establishment of new OMCs the then government of PML, in 2017, had initiated work on the new policy and the ministry of Petroleum had started consultations with the stakeholders regarding criteria for setting up new oil  marketing companies. Under the new proposed policy the government is likely to enhance the cost of opening of new OMC from Rs 500 million to Rs 6 billion.

Under the new policy, the OMC would now be required to apply for marketing license in accordance with the provisions of the Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules, 2016 and provide three years plan related to marketing, retail development, transportation, infrastructure development and investment. It is also proposed that the OMC must have a storage of 20,000 tons each for high-speed diesel and petrol or capacity equal to 20 days of average sales, whichever is higher, prior to beginning petroleum product sales in the country. However it is unclear that what will be the fate of the OMCs which have already received licenses from OGRA regarding the setting up their companies. An official of OGRA said that the new rule cannot be applied to the investors who have already received license from OGRA or licensees cannot be stopped from setting up new OMCs as it will have legal repercussions.