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Oil sector: government eyes investment of Rs 12 billion in three years

The government is projecting an investment inflow of Rs 7.5 billion within the next three years if licences are issued to at least 15 companies to set up oil marketing companies (OMCs) and oil refineries in the country. According to documents available with Business Recorder, the cases of these companies for grant of licences are currently under consideration by Oil and Gas Regulatory Authority (Ogra).
Documents submitted to Ministry of Finance by OGRA reveal that the establishment of nine new OMCs would bring in an investment of around Rs 4.5 billion in three years.
"Three cases of oil refineries and two cases of pipeline companies (with proposal to lay pipelines) are under process, and expected to start construction in coming years," the documents reveal.
Ogra granted 21 licences to new companies last year compared to 20 over the past 70 years and this has baffled petroleum experts. G A Sabri, former secretary petroleum, told Business Recorder that "OGRA has failed to manage existing companies and therefore it is beyond comprehension as to why it is granting more licenses. The approach to approve more licenses would just result in mushroom growth of companies."
"Ogra should focus on regulating the sector instead of relaxing licensing policies to benefit some favorites," he said, suggesting the regulatory authority and the Ministry of Petroleum increase licensing fees to discourage issuance of fresh licenses.
Faisal Khalil, secretary Oil Companies Advisory Council, told Business Recorder that the market for the oil sector was rapidly growing in the country; therefore the issuance of new licenses would help bring competition in the market.
"It is good for the customers," he said, adding OGRA should ensure implementation on regulations formulated for oil marketing companies.
He further stated that the new oil companies would not impact on the LNG sector as LNG was replacing furnace oil only, and the government has already banned import of furnace oil to encourage LNG imports.