Bowing to pressure, govt scraps petroleum regulatory orders

KATHMANDU, APR 06 -

Bowing to pressure from petroleum dealers, the government on Friday “scrapped” the Petroleum and Gas Transaction (Regulatory) Orders 2013 .

Demanding the annulment of the orders, petroleum and LPG dealers had threatened to bring fuel supply to a complete halt from April 7. The government and agitating petroleum dealers reached an agreement on Friday to bring Petroleum Act instead of governing the petroleum business through the regulatory orders.

However, the agreement has mentioned the word “suspended”, not “scrapped”. This was done just to show that the government did not bow to pressure from petroleum dealers, according to government officials.

According to Nepal Petroleum Transport Entrepreneurs Federation President Khageshore Bohara, the government has agreed to formulate the Act by holding wider consultations with stakeholders. “Once the country gets a parliament, the Act will be enforced to govern the whole petroleum business,” said Bohara.

With Friday’s agreement, the government’s plan to govern the petroleum business and facilitate entry of established business houses into the petroleum business has been pushed back. With the current government struggling to set the Constituent Assembly (CA) election date, it will take at least a year to bring the Petroleum Act.

Consumer rights activist Jyoti Baniya said the government was unable to defend the orders as it was issued unilaterally. “The government did not incorporate petroleum dealers and stakeholders in any discussion before issuing such a vital draft,” he said. “In the end, the government itself was compelled to scrap it.”

The government had published the orders on March 13 in the Nepal Gazette, ending Nepal Oil Corporation’s (NOC) 40-year monopoly and paving the way for private players in petroleum import and refinery business. Dissatisfied with the government’s move, Nepal Petroleum Dealers National Association, Nepal LPG Industry Association, Petroleum Transport Entrepreneurs Federation had joined forces and announced halting fuel supply from April 7. “With the agreement, we have also called off our protests,” Bohara said.

A number of private firms, including a few business houses, had expressed interest to invest in petroleum trade, oil processing, and exploration after the orders were issued. However, the aspirants were waiting a clear government view after criticisms over the orders, even from experts.

Experts had warned that the orders alone were not enough to govern such a huge and volatile business with high investment risk. They had expressed doubts that the regulatory orders will attract massive private investment and address potential risks.

Dealers had said it was difficult for them to follow the “complex” provisions such as application fees. The regulation had set the application fees for a refinery installation licence at Rs 500,000, while that for a petroleum business licence had been fixed at Rs 100,000. The licence fee was set at Rs 5 million, renewable every five years at a cost of Rs 500,000.

The minimum paid-up capital required for refining companies, petroleum trading firms, LPG importing firms and LPG bottling plants had been set at Rs 20 billion, Rs 10 billion, Rs 5 billion and Rs 50 million, respectively.

As per the orders, private companies dealing in petrol, diesel and kerosene would have to install a depot with an installing capacity of 20,000 kl, while LPG bottling plants would have to have a stock capacity of 500 tonnes.

Source: The Kathmandu Post