Pakistans Oil and Gas Regulation Authority has granted an unprecedented number of marketing licenses to lubricant players in recent months in hopes of fostering competition and investment in the sector. Meanwhile, an industry association says the regulators fee structure needs reform.
Due to increased domestic lube demand, OGRA has given seven firms lubricants marketing licenses in the past six months, an official confirmed.
The impetus for additional licenses to sell lubricants wasnt due to limited storage capacity. The domestic storage for lube base oils and lubricants is adequate, OGRA official Imran Ghaznavi told Lube Report Asia. Domestic supply meets almost 75 percent of the lubricants demand within the country while the rest is fulfilled by imports. Instead, OGRA said the additional licenses will foster competition and increase private investment in the market.
Since last September, the number of lube marketing licenses has been extended to 107, Ghaznavi said, adding that any person meeting the regulators Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016 criteria may be granted a license.
Pakistans Oil Companies Advisory Committee has challenged the legality of the fee structure outlined in the regulators rules, however, on the Islamabad High Court, the countrys Dawn newspaper reported last month.
OGRAs fee for lubricant marketing licenses is 1 million Pakistani rupees (around U.S. $9,500) and its fee for plants that manufacture or recycle lubricants or grease is Rs 50,000. Storage and testing facilities must pay Rs 100,000 and 500,000, respectively. Fifty percent of the those fees are required upon renewing or modifying licenses, which have a maximum validity of 30 years when originally granted and 15 years when renewed. On top of that, lubricant and other oil marketers must pay OGRA .005 percent of their gross sales.
OCAC contested that marketers should not have to reapply for and renew their licenses, and that the gross sales fee was more akin to a government sales tax that falls outside the purview of a regulator. The two entities are expected to settle on an agreement out of court.
Ghaznavi said that currently, Pakistan has 78 lube manufacturing plants, including its newest addition – the Lahore plant opened by Hi-Tech Lubricants, which was granted a manufacturing license last August. The 107 lubricant marketing companies in the country include the recent additions of Al-Masood & Company; Exol Pakistan Ltd.; Filter House; Ally Tradecorp International Pvt.; Power Oil & Lubricants; Petromin Pakistan Pvt.; and Momin & Sons.