Nepal Oil Corporation (NOC) is mulling issuing operating licences for new gasoline stations in the Kathmandu Valley after a break of almost seven years.

The state-owned oil company had stopped issuing new permits to prevent haphazard growth of petrol pumps. As most refuelling stations have been operating without maintaining the required standards, the government had issued a directive to permit the entry of new outlets.  

The corporation said that the proposal to reopen licences was under discussion at the NOC board. Deepak Baral, spokesperson at NOC, said the management had sent the proposal to the board two weeks ago. He said that the corporation had also started doing homework to revise the existing bylaws related to petroleum transactions.

There are 1,400 petrol pumps across the country, 143 of them in the valley. “The amendment to the bylaws is aimed at regulating the existing fuel stations,” he said.

After enforcing the petrol pumps standard in 2008, NOC had stopped issuing licences for new stations. The corporation said that it had been mulling enforcing separate standards for the existing petrol pumps and newcomers.

In 2013, the government had issued the Petroleum and Gas Transaction (Regulatory) Orders aimed at involving the private sector in the petroleum business. However, the orders were withdrawn immediately following criticism that the government had not done adequate homework and that they would not be able to govern the huge petroleum trade sector. The government had then pledged to create an act instead.  

Under the proposed orders, the government has set the application fee to obtain a petroleum business licence at Rs100,000. Likewise, the approval licence will cost Rs5 million, and it has to be renewed every five years which will cost Rs500,000.

The minimum paid-up capital required for a petroleum trading firm has been set at Rs10 billion. As per the orders, private companies dealing in petrol, diesel and kerosene have to build a depot with a capacity of 20,000 kilolitres. LPG bottling plants are required to have a stock capacity of 500 tonnes.

Likewise, a petrol pump should have at least 3 ropanis of land to operate in the valley. Those operating inside the metropolitan area and municipalities should possess a plot of 1.5 ropanis and 2 ropanis respectively. In addition, a petrol pump should keep at least four fire extinguishers of 10 kg weight. Meanwhile, the Nepal Petroleum Dealers’ Association has criticized NOC’s move to reopen the issuance of licences.

The president of the association Lilendra Prasad Pradhan said they were not against NOC’s decision to provide new permits, but that a uniform standard should first be set for operating petrol pumps in a specific area. “The same standards should be applied to new entrants.”

Pradhan said that the government should consider proper safety measures, distance between pumps and possible traffic congestion while considering issuing new licences. “At the same time, NOC should study the potential sales volume of the new petrol pumps and its ability to supply them.”

Shambhu Koirala, director general of the Department of Commerce and Supply Management, said the NOC board had initiated the move citing the construction of new highways, expanded road network and emergence of new municipalities inside

the valley.

“The petroleum transaction orders are in the process of being amended for the purpose,” said Koirala, who is also an NOC board member.