ISLAMABAD, April 25: The government has banned new oil marketing companies (OMCs) till such time a comprehensive policy is announced to ensure safety and security of the population.
A senior government official told Dawn the Ministry of Petroleum and Natural Resources had also been directed not to process any application for issuance of marketing licence to oil companies and formulate a policy in consultation with the Oil and Gas Regulatory Authority (OGRA) on safety standards and minimum investment criteria as soon as possible.
The decision to this effect was taken by the Economic Coordination Committee (ECC) of the cabinet on Thursday, presided over by Finance Minister Shaukat Aziz. The ECC members thought that allowing a company to start marketing business without a clear cut policy would raise public suspicion that licences were granted on political ground.
The ECC asked the Ministry of Petroleum that the oil marketing policy envisaging all aspects like safety standards, business chains, product specifications, minimum social commitment and related issues must be submitted to the ECC for approval followed by a formal announcement.
The ECC was surprised to note that there was no approved policy for OMCs and the issue was still being covered under a decades old act when oil marketing was a government subject.
Since the petroleum sector stands deregulated for more than three years now, it was found imperative to put in place certain standards in the light of market environment and emerging requirements that should be followed by the private sector.
The sources said companies that had obtained licence but could not start marketing business would have to follow the same policy.
The issue came under discussion when the petroleum ministry presented a summary for allowing Admore Gas, a Karachi based company, to market petroleum products as a licensed OMC.
The Central Board of Revenue, the Securities and Exchange Commission of Pakistan and the Ministry of Petroleum had supported the proposal to give a licence to the company to create further competition in the market. The Ministry of Petroleum informed the ECC that Admore fulfilled the necessary requirements for the setting up of OMC.
This would have been the 7th company to get an oil marketing licence. Bosicor, another Karachi based company, has so far been unable to start retail marketing of oil products despite having a valid licence because its refinery could not become operational.
Attock Oil Company and Pak-Arab Refinery (PARCO) are new entrants in the oil marketing business after the deregulation of the petroleum sector. Earlier, Pakistan State Oil, Shell and Caltex had been in the market.