Feb 5, 2016

Myanmar Eases Restrictions on Petrol Stations, Exports to China

State-run Myanmar Petroleum Products Enterprise (MPPE) has introduced new laws aimed at easing the burden of doing business in the petroleum market.

From now, new petrol stations will be able to operate in 3,200 square foot plots of land which must be in 40’x80’ plots, according to MPPE. In the past, 10,000 square feet of land was needed to open a new petrol station.

“It is hard to get enough land to meet the petrol station requirements that were on the books, therefore, we decreased the required space of the petrol station,” U Myint Zaw, director of MPPE, told Myanmar Business Today.

If the space of the new proposed petrol station is only 3,200 square feet wide, the station will not be allowed to store more than 3,200 gallons of petrol and if located within the city, the station must store the petrol using underground storage.

However, if the proposed space of the petrol station is more than 8,000 square feet, the station is allowed to store up to 12,800 gallons of petrol. If the proposed space of the petrol station is more than 10,000 square feet, the station is allowed to store more than 26,000 gallons of petrol but only 16,000 gallons can be stored above ground, U Myint Zaw added.

“Repealing this law is good because it is really hard to get the 10,000 square feet space. With the release of the regulation, more petrol stations can open and it will be good for the consumers also,” Dr U Win Myint, secretary of Myanmar Petroleum Trade Association (MPTA).

Before building a new petrol station, prospective owners must obtain approval from their local fire brigade to ensure they are outside of the regulated distance of 30 metres from public facilities such as schools, hospitals, culturally relevant landmarks and highly crowded places, according to Deputy Director of Myanmar Fire Force U Aung Swe.

If petrol station owners do not comply with these regulations, they could face up to three years in prison.

In addition to easing restriction on petrol stations, exporting petroleum to China is now legal as of January 6 for the first time in Myanmar, according to the Ministry of Commerce.

The exporters are only allowed to export to China and they will be punished if they sell this petroleum in local market due to their class restrictions that determine whether they can sell gas internally or if they can export petroleum products.

“We are planning to decrease the tax for exporting petroleum to China. However, if the exporters sell this petroleum in local market, the government will lose its tax money. Therefore, we are negotiating how to punish these exporters,” an official from the Ministry of Commerce said.

Petroleum is mainly imported via Singapore for local use because Myanmar does not have ports capable of handling large ships carrying oil from Saudia Arabia. Therefore, petroleum importers must have the cargo redistributed to smaller ships in Singapore to bring into Myanmar ports.

In addition to shipping difficulties, the petroleum products that Myanmar exports to China is less expensive and more convenient for Chinese importers than to directly ship the product into China and distribute it over land to the western reaches of the country. Karin and Shan state help facilitate this trade by importing oil from Thailand and exporting it to areas of Western China.

The yearly petroleum consumption in Myanmar is about 40 million gallons per month. During the 2014-15 fiscal year, 278.08 million gallons of gasoline and 531.54 million gallons of diesel were consumed by the local market, according to the Ministry of Energy figures.

Myanmar produces 58,000 barrels of oil per day on average from oil derricks in Ayeyarwaddy region and off-shore drilling near Rakhine, Gulf of Mottama and Martaban.

There are currently 12 government-owned petrol stations and 1,718 private petrol stations around the country. Among them, there are 59 stations in Naypyitaw, 133 stations in Yangon, 919 stations in Mandalay and the rest in other regions and states which will service the nation’s roughly 470,000 petrol vehicles. Also, MPPE said they have received 603 applications to open new petrol stations in Myanmar.

Source: Myanmar Business Today