NOCs, Licenses & Permissions from Regulatory Authorities / Govt. Deptt
NOCs, Licenses & Permissions from government of pakistan Authoroties
In Pakistan, different businesses scope of whom come under the regulated businesses must obtain various No Objection Certificates (NOCs) and permissions from different government authorities in addition to registration of a specific company under Companies Act 2017 with SECP.
Below is a brief list of the required NOCs and permissions from relevant authorities, along with the applicable laws.
1. Oil and Gas Regulatory Authority (OGRA)
NOCs and Licenses
§ Exploration and Production License: Required for oil and gas exploration and production activities under the Petroleum Policy 2012.
§ Construction & Marketing License: Necessary for marketing petroleum products including Oil Marketing Company (OMC) License, Lubricants Marketing Company (LMC) License, LPG Marketing license and other licenses.
Criteria for the grant of license to new Oil Marketing Company
Main features of criteria for grant of licence to new oil marketing company are as follows however for details please see next pages:
- The applicant is a private or public limited company registered under the laws of Pakistan
- The company is not affiliated in any form with any existing oil marketing company operating in Pakistan.
- Company shall first uplift petroleum products produced by the local refineries before opting for import of the same.
- Company should have experienced personnel in oil marketing from national and international oil industry
- Marketing plan should include supply arrangement, plan for setting up retail outlets over a period of 3 years and compliance with laid down standards such as Depots, Retail Operations and Road Transport.
- Marketing license will be provisional for 3 years till the marketing plan is executed/implemented.
- Investment plan should concentrate on development of depots, installation etc. and must create minimum storage of 20 days of their proposed sales, within 3 years.
- The company has a total investment capacity of not less than 500 million rupees over an initial period of three years, with minimum upfront equity of 100 million rupees based on the criteria of 60:40 debt/ equity ration, supported by a due diligence certificate from a scheduled bank or financial institution
- Sponsors/ Directors/ Relatives of Sponsors/ Directors are not involved in any criminal case, bank/ loan or direct/indirect Federal tax defaults and no case is pending in National or International courts for recovery of loans/ tax frauds etc.
- Company will take necessary steps in advance for protection of environment as per applicable rules.
- The company will operate in accordance with the terms and conditions of the license as prescribed by the Licensing Authority under the Rules.
CRITERIA FOR ISSUANCE OF PETROLEUM PRODUCTS MARKET LICENSE
I) Corporate Structure of the Company.
Corporate structure is important form the point of view of protection against leakage in Government revenues i.e. duties taxes and sales tax. Therefore the prospective company shall be a Private /Public Limited company quoted on the Stock Exchange or unquoted Private / Public Limited company registered in Pakistan. However, the prospective company should not be affiliated in any manner with existing oil marketing company operating in Pakistan.
II) Experience in Oil Marketing
The prospective company should have experienced personnel in oil marketing from national and international oil industry. Moreover, technical collaboration/ franchise agreement within the national/ international oil industry other than the oil marketing companies operating in Pakistan shall have an added advantage.
III) Marketing Plan
The Marketing Plan of the prospective candidate shall constitute the following
provisions:-
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- a) The plan shall highlight the supply arrangements and it shall be incumbent on the new company to first uplift local refinery product and only deficit volumes as determined by OCAC shall be imported.
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- b) A specific plan for setting up retail outlets over a period of 3 years should be given. The number of retail outlets to be setup during the interim period of three years shall commensurate with the Marketing Plan being submitted by the prospective applicant. The plan shall further specify the cities/ locations where the retail sites are to be set up. The Marketing plan should provide coverage both in urban/rural areas and also in far flung area.
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- c) Compliance with the laid down standards of Retail Operations, including environmental and safety standards.
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- d) A transport plant should be included as part of the marketing plan which shall include a commitment that road transport used will met safety and petroleum products transport standards.
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- e) The company should have to comply with the depot operations standards and maintain adequate stock
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- f) Marketing License should be provisional for 3 years till the marketing plan in executed / implemented. In case of failure to comply with the above condition, the Licensing Authority will not renew the marketing license. Depending on the nature of the non-compliance, the Licensing Authority may also impose a penalty in such circumstances.
IV Plan for Investment in Infrastructure
a) A new company should develop storages at locations and capacities corresponding to their business strategy, estimated business volumes and associated economics.
b) Investment Plan of the company should concentrate on:
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- Infrastructure development of depots, installations etc.
- The new company must create minimum storage of 20 days of their proposed sales as infrastructure prior to beginning sales in the country. A specific plan to this effect over a period of 3 years shall also be provided.
V Financial Capability
a) Equity investment should commensurate with the marketing plan being submitted by the new company. However, the prospective company shall have investment capability of Rs.500 million or more over a period of 3 years with a minimum upfront equity of Rs.100 million. Equity investment should however, be based on the criteria of 60:40 debt/ equity ratio. The group sponsoring the company should be of repute having adequate financial resources to manage the new entrant in the initial period.
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- b) The company should have capability to raise funding from commercial banks/financial institutions. A letter of support from banks/ financial institutions must be provided with the application.
VI Bank Default/ Criminal Proceedings
The prospective company shall submit an affidavit confirming that:-
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- a) None of the Sponsors/ Directors/ Relatives of sponsors/ Directors is involved in any criminal case and or bank/ loan and direct and indirect Federal taxes default.
- b) No case is pending in National or international courts for recovery of loans/ tax frauds etc.
- c) All exercise formalities completed as per rules and regulation prescribed by the CBR prior to start of commercial operation.
Bank default/ criminal proceedings shall apply to sponsors/ Directors and other persons in accordance with the relevant law.
VII) The products to be marketed should conform to the GOP approved specifications.
VIII) The company should take all necessary steps in advance, for protection of environment as per applicable rules.
IX) Validity of License
The company will operate in accordance with the terms and conditions of the license as prescribed by the Licensing Authority under the Rules.
§ NOC for Pipeline Construction: Necessary for constructing pipelines for oil and gas transportation.
§ NOC for CNG Stations: Required for establishing CNG stations, which involves compliance with safety and environmental regulations.
Guide Books for Obtaining Oil & Gas Sector Licenses:
To know more about specific Licenses in Oil and Gas Sector, please Click on relevant License Heading below;
- Licenses for CNG Sector (Part -I)
- Licenses for CNG Sector (Part -II)
- Licenses for LPG Sector
- Licenses for OIL Sector
Relevant Laws
§ Petroleum Act, 1934
§ Petroleum Rules, 1937
§ Pakistan Petroleum (Refining, Blending and Marketing) Rules, 2016
2. Pakistan Telecommunication Authority (PTA)
NOCs and Licenses
NOCs and Licenses are required for a variety of telecommunication services for operational communications including following;
§ Long Distance & International
§ TPSP – Information Memorandum
§ DIRBS
§ Mobile Device Manufacturing in Pakistan
Relevant Laws
Pakistan Telecommunication (Re-organization) Act, 1996
3. Pakistan Electronic Media Regulatory Authority (PEMRA)
NOCs and Licenses
NOCs and Licenses are required if the company intends to engage in any broadcasting or media-related activities in Pakistan including following;
§ DTH
§ FM Radio
§ Cable TV
§ IPTV
§ MMDS
Relevant Laws
PEMRA Ordinance, 2002
4. National Electric Power Regulatory Authority (NEPRA)
NOCs and Licenses
Power / Electricity Generation License: Required for any power generation activities associated with oil and gas operations.
Power / Electricity Distribution License: Necessary if the business involves distributing electricity generated from oil and gas resources.
Relevant Laws
NEPRA Act, 1997
5. Securities and Exchange Commission of Pakistan (SECP)
NOCs and Licenses
§ Company Registration: Businesses must register with SECP to operate legally.
§ NOC for Public Offerings: Required for companies intending to raise capital through public offerings.
§ NOC for Formation of NBFC: Required to form a non-banking finance company.
§ NOC for Licensing: Necessary for obtaining a license to operate as an NBFC, which includes various services like leasing and investment finance.
§ NOC for Insurance License: Required for establishing an insurance company.
§ NOC for Product Approval: Necessary for launching new insurance products.
§ NOC for Leasing License: Required for companies intending to engage in leasing activities.
§ NOC for Financial Services: Necessary for providing financial leasing services.
§ NOC for Microfinance Bank Licensing: Required for establishing a microfinance bank.
§ NOC for Microfinance Institution Registration: Necessary for registering as a microfinance institution.
Relevant Laws
Companies Act, 2017
6. State Bank of Pakistan (SBP)
NOCs and Licenses
§ Foreign Exchange License: Required for any foreign investment or remittances related to the oil and gas sector.
§ Banking License: If the company intends to operate financial services.
§ NOC for Bank Licensing: Required for the establishment of new banks.
§ NOC for Branch Expansion: Necessary for opening new branches or expanding existing ones.
Relevant Laws
Foreign Exchange Regulation Act, 1947
7. Environmental Protection Agency (EPA)
NOCs and Licenses
§ Environmental Impact Assessment (EIA): Required for projects that may significantly affect the environment.
Relevant Laws
Pakistan Environmental Protection Act, 1997
8. Local Government Authorities
NOCs and Licenses
§ NOC for Land Use: Required for land use changes for oil and gas operations, such as drilling or setting up facilities.
§ Construction Permits: Necessary for any construction related to oil and gas facilities.
Relevant Laws
Local Government Ordinance, 2001
9. Additional Regulatory Bodies
§ District Commissioner: Issues NOCs for petrol pumps and CNG stations, requiring reports from various departments including civil defense and highways.
§ Ministry of Petroleum and Natural Resources: May require additional approvals depending on the nature of the project.
Navigating the regulatory landscape in Pakistan requires obtaining multiple NOCs and permissions from various authorities. Each authority has specific requirements and applicable laws that businesses must comply with to operate effectively.
Zero Time to Start-up Policy for No Objection Certificates (NOCs) 2021
(A Government of Punjab, Pakistan initiative on NOC Licenses and Permissions)
The low levels of investment can be attributed to a complex, multi-layered, and opaque regulatory regime that involves enforcement by federal, provincial, and municipal government agencies. Regulatory instruments used under this regime consist of various registrations, licenses, permits, and certificates, including NOCs. These regulatory requirements significantly increase the cost of doing business. In the Ease of Doing Business Index (2020), Pakistan is considerably behind peer economies, ranking 108 out of 190.
The Government of Pakistan (GoP) launched the Pakistan Regulatory Modernization Initiative (PRMI) as a national investment climate reform programme to address these regulatory challenges. It aims to reduce the regulatory barriers to investment entry and doing business in Pakistan through a structured process for reviewing, eliminating/simplifying, reengineering, reforming, and digitalizing the delivery of business registrations, licenses, and permits.
Punjab, the largest and most industrialized province of Pakistan, aims to be the friendliest destination for investment and doing business. The Government of Punjab (GoPb) is taking meaningful steps to implement the PRMI in Punjab under the supervision of a Working Group co-chaired by the Minister of Finance, Punjab, and the Chief Secretary, Punjab with Planning & Development (P&D) Board as its secretariat. The reform effort will complement the Punjab Growth Strategy 2023 for attracting investments into the province. It will also contribute to the federal government’s drive to create an overall conducive business environment in Pakistan.
One of the significant regulatory barriers to investment and doing business in Punjab is compliance with business NOCs which are commonly considered regulatory barriers and hassle factors in obtaining regulatory approvals to investment and doing business. NOCs are not authorizations in themselves to do business. NOCs are required in the present regulatory regime to prove that relevant agencies or government departments have no objection to an entity starting a business activity. Consequently, a business first needs to obtain all related NOCs from various agencies before it can obtain the required approval to start a business. NOCs significantly increase compliance time and cost, especially for micro, small & medium enterprises (MSMEs) that lack resources to comply with these requirements.
The Government of Punjab, through this policy, intends to replace the business NOCs regime with a system of compliance verification through tan effective inter-agency mechanism. The transition to this reformed compliance verification process (CVP) will follow a risk-based approach. Following this approach, NOCs for low-risk business activities will be eliminated to facilitate immediate start (zero-time to start-up – ZTTS). For medium-risk business activities which can also be started immediately (ZTTS), the ex-post CVP will replace NOCs, and be undertaken by the regulatory agency to which an application for regulatory approvals is made (hereafter called the primary regulatory agency). NOCs for high-risk business activities will be replaced by ex-ante compliance verification undertaken by the primary regulatory agency once it receives the completed application. High-risk business activities can only be started after the completion of CVP.
Furthermore, the policy intervention will replace NOC nomenclature with compliance verification. All regulatory agencies requiring NOCs as supporting documents for any regulatory approval will amend the concerning laws, regulations, rules, and administrative orders to introduce compliance verification as the new nomenclature and its underlying mechanism.
Policy Objectives:
§ Facilitate investment and business activities by reducing the burden of regulatory compliance.
§ Adopt a transparent and business-friendly risk-based approach to drive verification of regulatory compliance.
§ Facilitate regulatory compliance by adopting an ex-post approach to compliance verification undertaken by the regulator and after it has received the completed application for regulatory approval.
§ Promote digitalization of regulatory compliance verification with time-bound and trackable approval workflows.
Guiding Principles:
The guiding principles are designed to achieve the policy objectives for ensuring that regulatory processes are transparent, foster interagency coordination and collaboration, and create a conducive regulatory environment for investing and doing business in Punjab.
Given the negative perception of NOCs in the private sector, this policy intervention intends to introduce a clear, business-friendly, and function-centric nomenclature replacing the term NOC with compliance verification.
i. A concurrent, interagency compliance verification mechanism as a part of the regulatory approval process: The responsibility to verify compliance with regulatory requirements under NOCs shall be placed on concerned agencies. It shall be the responsibility of the primary regulatory agency to initiate concurrent CVP for all required NOCs by directly contacting all concerned agencies. The CVP, following a risk-based approach, will fast-track verification of compliance with regulatory approvals for investing and doing business in Punjab. The CVP shall reduce duplication of information and documentation from applicants, thus curtailing the regulatory ‘hassle factor’ for investing and doing business in Punjab. Each primary regulatory agency shall act as a single window for obtaining CVP on behalf of the business applicant.
ii. Risk-based regulatory administration: Identify environmental, occupational, social, and public health and safety risks associated with each business activity. The compliance verification for each activity shall be linked to the risk level associated with the business activity.
iii. Ex-post compliance facilitation for medium-risk business activities: Ex-ante administration of regulatory requirements linked to NOCs shall be replaced with ex-post compliance verification after the grant of regulatory approval the same day (zero-time).
Sufficient ex-post compliance guidance shall be provided to assist the businesses in ongoing compliance.
iv. Ex-ante compliance verification for high-risk business activities: The administration of regulatory requirements linked to NOCs shall be conducted through an ex-ante inter- agency coordination mechanism. It involves the primary regulatory agency sharing essential information and documents with all concerned regulatory agencies for CVP before approving the application for regulatory approvals to invest and do business in Punjab. Necessary inspections by the concerned regulatory agency to complete the CVP will be coordinated through the primary regulatory agency.
v. Proportionality: It shall be the responsibility of the primary regulatory agency to seek compliance verification from concerned regulatory agencies only when necessary, such as may be the case with medium and high-risk business activities, with remedies/sanctions for non-compliance proportionate to the risks posed.
vi. Transparency: Ensure full transparency by disseminating in the public domain the operative rules, relevant procedures, and requirements for compliance verification at the time of applying for regulatory approvals. A complete checklist of information and documents necessary for compliance verification shall be provided to the applicants as part of the application package required for regulatory approvals to invest and do business in Punjab.
vii. Efficiency and effectiveness: Ensure regulators monitor data and performance indicators to assess impacts and review regulations periodically in a systematic manner to ensure that they meet their desired objectives relating to mitigating risks – environmental, occupational, social, public health and safety without restricting investment and opportunities to do business in Punjab.
viii. Promote digitalisation for compliance verification: In managing the risks associated with business activities (concerning the environment, occupational, public health and safety, and others that may appear), online solutions shall be introduced to reduce the compliance verification burden.
Source: https://piu.punjab.gov.pk/system/files/ZTTS%20-%20Reform%20Policy_0.pdf