Govt to reintroduce petro regulatory orders
KATHMANDU, AUG 09 -
The government is reintroducing the Petroleum and Gas Transaction Orders, showing leniency to the private sector on some of the clauses.
The orders, which was scrapped earlier, is likely to be reintroduced soon and there will be some amendments in favour of private firms willing to invest in the petroleum business, officials at the Ministry of Commerce and Supplies (MoCS) said. “The revised orders prepared by the Department of Commerce and Supply Management in coordination with experts is in its final stage,” said the officials.
However, the government is not yet clear whether the revised petroleum and gas transaction decree should be brought just as regulatory orders or as an Act.
Narayan Prasad Bidari, director general of the department, said there have been some amendments in areas like capital requirement, safety standard, petroleum and gas plant and structure, environment assessment and consumers rights.
On March 13, the government had published the orders in the Nepal Gazette, but it was forced to scrap it on April 6 after it received a flurry of criticism from petroleum traders and experts.
Experts had warned that the orders alone was not enough to govern such a huge and volatile business with high investment risk. They had expressed doubts whether the regulatory orders would attract massive private investment and address potential risks. And, petroleum and liquefied petroleum gas (LPG) dealers and bottlers had threatened to bring fuel supply to a complete halt.
The issue was then settled after the government and agitating petroleum dealers agreed to bring the Petroleum Act instead of governing the petroleum business through the regulatory orders.
Petroleum dealers and LPG bottlers had said it was difficult for them to follow the “complex” provisions such as application fees. The orders had set the application fees for a refinery installation licence at Rs 500,000, while that for a petroleum business licence was fixed at Rs 100,000.
Moreover, private companies dealing in petrol, diesel and kerosene would require installing a depot with a capacity of 20,000 kl, while LPG bottling plants would need to have a stock capacity of 500 tonnes.
The orders had also set the minimum paid-up capital required for refining companies, petroleum trading firms, LPG importing firms and LPG bottling plants at Rs 20 billion, Rs 10 billion, Rs 5 billion and Rs 50 million, respectively. According to Bidari, stakeholders concerned have requested not to make any mandatory provisions of fulfilling the capital requirement in the initial phase or while obtaining the license to operate petroleum business.
Bidari said stakeholders are of the view that it is not rational to ask to fulfil the capital requirement for any industry before its operation or during the period of obtaining license. “As per their concerns, we have recommended the government adopt some flexibility on this issue,” he said.
However, the provision envisaged by the orders that gasoline stations cannot be established within a 500-m radius of each other is unchanged. “In addition, to control settlement density after a petroleum industry is established, we have proposed “Buffer Zone” facilities in such areas,” Bidari said.
He said environment issues will be simplified as per the standards of the Ministry of Environment. A number of private firms, including a few big business houses, had expressed interest to invest in petroleum trade, oil processing, and exploration after the orders were issued for the first time.
Source: The Kathmandu Post
