Introduction
A petrol pump business—also known as a fuel station or gas station—is a strategic commercial enterprise that supplies essential fuels such as petrol, diesel, and liquefied petroleum gas (LPG) to vehicles and machinery across Nepal. As a critical component of the country’s energy and transportation sectors, the operation of petrol pumps is tightly regulated to ensure safety, reliability, and public interest.
In Nepal, petrol pumps are more than retail outlets; they are vital infrastructure, regulated under stringent frameworks set by the Nepal Oil Corporation (NOC) and other government authorities. If you’re planning to establish a petrol pump, understanding the legal landscape is essential for success.
Legal Framework Governing Petrol Pumps in Nepal
Petrol pump operations in Nepal are primarily governed by the following laws:
- The Petroleum Act, 2040 (1983)
- The Petroleum Rules, 2041 (1984)
- The Petroleum and Gas Transaction Act, 2051 (1994)
- The Nepal Oil Corporation Act, 2026 (1970)
- The Environment Protection Act, 2076 (2019)
These laws regulate licensing, environmental compliance, safety, and operations.
According to the Petroleum and Gas Transaction Act, 2051, a petrol pump is defined as “a place where petroleum products are stored and sold”, highlighting its dual nature as both a storage facility and a sales outlet.
Key Legal Requirements
To open a petrol pump in Nepal, several prerequisites must be met:
- Citizenship: Only Nepali citizens or companies registered in Nepal are allowed to operate petrol pumps.
- Land Ownership: The applicant must either own or have a long-term lease of suitable land that complies with NOC guidelines.
- Environmental Clearance: An Environmental Impact Assessment (EIA) or Initial Environmental Examination (IEE) must be conducted.
- Safety Compliance: Facilities must adhere to fire safety and petroleum storage standards.
- Local Approval: A No Objection Certificate (NOC) must be obtained from the relevant local authority.
- NOC Licensing: Final licensing approval must be obtained from the Nepal Oil Corporation.
Step-by-Step Registration Process
Step 1: Site Selection and Approval
The proposed site for the petrol pump must comply with specific distance regulations from key infrastructures. These vary based on district classification:
District Category Minimum Distance from Existing Pumps Additional Requirements Kathmandu Valley 2 kilometers Traffic Impact Assessment Major Cities 1.5 kilometers Municipal Approval Rural Areas 1 kilometer Endorsement from Local Government Highway Locations 500 meters Clearance from the Department of Roads
Submit the site layout plan to NOC for preliminary approval.
Step 2: Environmental Clearance
As per the Environment Protection Act, 2076:
- Conduct an IEE or EIA, depending on the size and nature of the project.
- Submit the report to the Department of Environment for approval.
Step 3: Local Authority NOC
Apply to the local municipality or rural municipality with:
- Project overview and site plan
- Environmental clearance documents
Ensure the land use complies with local zoning regulations.
Step 4: Application to Nepal Oil Corporation
Submit a detailed application with:
- Completed NOC form
- Proof of Nepali citizenship or company registration
- Land ownership/lease documents
- Environmental clearance and architectural drawings
- Local authority NOC
- Financial proof and tax clearance certificates
Step 5: Final Inspection and Licensing
NOC will review the application, conduct site inspections, and, if all conditions are met, issue a license valid for five years, renewable thereafter.
Required Documents
Here’s a checklist of documents generally required:
- Application form (NOC)
- Citizenship certificate / Company registration certificate
- Land ownership certificate or long-term lease
- Cadastral and trace map
- Site layout and architectural drawings
- EIA or IEE report
- Local authority NOC
- Tax clearance certificate
- Financial statements
- Fire safety clearance
- Road access permit (if applicable)
- District Administration Office recommendation
Estimated Timeline for Registration
The full process typically spans 7 to 13 months, broken down as:
| Process Stage | Estimated Duration |
|---|---|
| Site Selection & NOC Pre-Approval | 1–2 months |
| Environmental Clearance | 2–4 months |
| Local Authority NOC | 1–2 months |
| NOC Application Review | 2–3 months |
| Final Inspection & License | 1–2 months |
Delays may arise due to incomplete documentation or regulatory backlogs.
Investment and Operational Costs for Petrol Pump
Department of Commerce, Supplies and Consumer Protection
Bank guarantee of NPR 2,000,000 is required at the Department of Commerce, Supplies and Commerce Protection
Technical and Safety Expenses
Your fuel station must comply with national infrastructure and safety standards. The following components are mandatory:
| Component | Specification | Estimated Cost Range (NPR) |
|---|---|---|
| Underground Storage Tanks | 30,000–50,000 liters capacity | 1,500,000 – 2,500,000 |
| Dispensing Units | Minimum 4 nozzles | 800,000 – 1,200,000 |
| Canopy Structure | Fire-resistant materials | 600,000 – 1,000,000 |
| Safety Equipment | Fire suppression system | 300,000 – 500,000 |
| Boundary Wall | Minimum height of 8 feet | 200,000 – 400,000 |
| Office Building | At least 200 sq. ft. | 800,000 – 1,500,000 |
Licensing and Registration Fees at NOC and other bodies.
| Fee Category | Amount (NPR) | Payment Schedule |
|---|---|---|
| Application Fee | 25,000 | At the time of submission |
| License Fee | 500,000 | Upon final approval |
| NOC Dealer Registration Fee | 200,000 | Annually |
| Environmental Clearance Fee | 150,000 | One-time |
| Municipal Permits | 100,000 | As per local authority |
| Total Licensing Cost | 975,000 |
Infrastructure Investment Breakdown
| Category | Minimum Estimate (NPR) | Maximum Estimate (NPR) |
|---|---|---|
| Land Purchase/Lease | 5,000,000 | 15,000,000 |
| Construction & Setup | 3,000,000 | 6,000,000 |
| Equipment & Machinery | 2,500,000 | 4,000,000 |
| Initial Fuel Stock | 1,500,000 | 2,500,000 |
| Working Capital | 1,000,000 | 2,000,000 |
| Total Investment | 13,000,000 | 29,500,000 |
This structured approach ensures regulatory compliance, environmental safety, and operational readiness for launching a petrol pump in Nepal. All prospective operators are advised to consult with legal and engineering experts to meet evolving regulatory standards.
Relevant Regulatory Bodies
Several agencies play a role in the regulation and operation of petrol pumps:
- Nepal Oil Corporation (NOC) – Licensing and supply management
- Department of Commerce, Supplies and Consumer Protection
- Department of Environment – EIA/IEE approvals
- Local Municipalities/Rural Municipalities
- Department of Roads – Road permits
How Onesphere Law Associates Can Help
At Onesphere Law Associates, we offer end-to-end legal and regulatory support for individuals and businesses looking to establish petrol pumps in Nepal. Our services include:
- Feasibility studies and land verification
- Environmental documentation (IEE/EIA)
- Coordination with local authorities
- Application preparation and submission
- Regulatory compliance advisory
- License renewal support
We ensure your application is complete, accurate, and in full compliance with the law—saving you time, resources, and unnecessary delays.
Conclusion
Starting a petrol pump in Nepal is a high-value venture, but one that demands full legal compliance, substantial investment, and patience. With evolving regulations and rising demand for fuel, petrol pumps remain a lucrative yet highly regulated business.
Partnering with experienced legal professionals is the best way to navigate the complex regulatory framework. Contact Onesphere Law Associates today to get started on your petrol pump venture with confidence.
FAQs
Who can open a petrol pump in Nepal?
Only Nepali citizens or companies registered in Nepal are eligible.
What is the minimum land requirement?
4 ropanis in urban areas and 3 ropanis in rural areas.
Can foreigners own petrol pumps?
No, foreign ownership is currently prohibited under Nepali law.
How long does the licensing process take?
On average, 7 to 13 months, depending on circumstances.
Are fuel prices regulated?
Yes, prices are fixed and adjusted by the Nepal Oil Corporation.
Need Legal Help?
Contact Onesphere Law Associates for expert assistance in petrol pump registration and licensing.
Visit: www.onespherelaw.com
Email: info@onespherelaw.com
Kathmandu, Nepal