ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has issued final notices to the country’s petroleum refining and marketing industry to immediately apply for fresh licences to continue their business or face punitive action.

A senior Ogra official told Dawn on Wednesday that the managements of leading refineries and marketing companies have been reminded of the regulator’s Feb 3 instructions “to obtain licence under Rule-6 Of the Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016 within 90 days i.e. by May 2, 2016 at the latest”.

Also, the oil marketing companies (OMCs) and refineries were told that they were also issued reminders on April 19 and 28 to apply for the licences which were not complied with. “Your are, therefore, finally directed to apply for the required licence under the applicable rules in field, to avoid any proceedings by this office under the applicable law/rules,” read identical notices separately sent to the refineries.

An oil executive said the oil companies have decided to defy the instructions and had taken up the matter with the government before they could go into litigation or stop operations which could create problems for the government.

A petroleum ministry official requesting anonymity said the ministry had assured the industry to support its legal position. The problem, however, was that Ogra is currently operating without a chairman and member oil and with an incomplete quorum and the industry’s request for dialogue was not being given consideration by the second-tier leadership of the regulator.

Among other things, the oil companies and refineries are not ready to accept fee structure notified by the Ogra. The Oil Companies Advisory Council (OCAC) – a representative body of all refineries and marketing companies – is reported to have asked the government and the regulator to hold the issue in abeyance until meaningful dialogue.

“Based on detailed discussions within the industry, [the] OCAC submits that there are serious concerns and reservations which if not addressed will threaten the viability of the downstream oil sector,” Omar Sheikh, chairman of the OCAC told the minister and secretary for petroleum and natural resources and the chairman Ogra.

Under recently notified “Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016, all the oil refineries, marketing companies and oil pipeline companies are required to pay Rs2 million non-refundable fee for grant, renewal, modification, extension, assignment, review, transfer, amendment, relocation or re-issuance of a licence.

Moreover, all these entities are also required to pay 50pc of licence fee for modification, extension, transfer or review of their licences. On top of that, every refinery, OMC, lubricant marketing company and pipeline is also required to pay 0.005pc of gross sales.

The new rules also entailed maximum validity of a licence for 30 years for a refinery and renewal for a maximum of 15 years. The OCAC, however, contended that companies once having obtained a licence and operating successfully, contributing to the national kitty and the economy should not have to re-apply for a new licence as no reasons had arose for a fresh one.

The OCAC chairman was of the view that the Ogra ordinance 2012 had already ratified the licenses of the OMCs and refineries and to now ask these companies to “re-apply for fresh licences is in direct contravention of the ordinance”.

Published in Dawn, May 5th, 2016