Unauthorized operations at Keamari: Ogra looking into violation of ordinance

Oil and Gas Regulatory Authority (Ogra) is looking into violation of Ogra Ordinance committed by two private oil marketing companies (OMCs) for unauthorized operations at Keamari (Karachi) storage terminal. According to an official of Ogra, Ministry of Energy had written a letter to Ogra asking the authority to stop unauthorized operation of two OMCs- Al-Noor Terminal and Hascol Petroleum- at the Keamari storage terminal. Subsequently, the regulator stopped the operations of these two OMCs at Keamari as they did not obtain operational licenses from Ogra.
The Ministry of Defence had reported to Ministry of Energy that the two companies were operative despite clear instruction to stop unauthorized activities there as both companies did not take No Objection Certificate (NOC) from the ministry.
The official of Ogra said the two companies obtained only construction licenses from Ogra and they did not fulfill all technical requirements like construction of storage facilities as per law. Both the private companies did not meet the prerequisites to conduct their marketing operations in Sindh.
Under Ogra laws, marketing licences are issued to OMCs after they fulfill all technical requirements including construction of storage facilities. Ogra has issued 21 licenses including to AL-Noor Petroleum and Hascol private limited to establish OMCs since July 2016.
In 2006, the government policy for establishing a new OMC entailed an upfront equity of Rs 3 billion and an investment of Rs 6 billion in three years and the criteria was applicable till 2010. To encourage new investors for development of storage infrastructure in the country, the government relaxed the policy in 2010 with Rs 100 million as equity and investment of Rs 500 million in three years.
The official said that these licences had been issued to new applicants to develop the storage infrastructure only and not for purposes of marketing of the product or development of petrol pumps.
Once the companies complete the construction of their storage facilities as per Ogra technical standards, they are allowed to market the product and develop petrol pumps to the extent of province/area, where they have the storage facilities in place, he said.
In addition, they are restricted to operate a specific number of retail outlets to be opened based on their available storage capacity.
Storage construction is a gradual process and time is needed to complete these projects as it involves procurement of land, resources, material, obtaining of NOC, construction of civil, mechanical and electrical works followed by Third Party Inspection to ensure compliance with technical standards before permission is granted to begin operations.