How to Start a Petrol Pump Business in Nepal: Complete Guide
What is a Petrol Pump Business
A petrol pump (fuel station) in Nepal refers to a retail outlet licensed to store, sell and distribute petroleum products (petrol, diesel, etc.) under regulation by Nepal Oil Corporation (NOC) and other government bodies. To operate legally, various laws, rules, licences, environmental and safety standards must be met.
Legal & Regulatory Framework
Some of the key laws and regulations you must be aware of:
- Petroleum and Gas Transaction Act, 2051 (BS) and related rules.
- Petroleum Products Seller Bylaws, 2075 BS (defines procedures for opening ordinary sellers, licences etc.)
- Environment Protection Act, 2076 BS and associated regulations (for environmental clearance, assessments)
- Local government / municipality laws (zoning, land use, local licences)
Eligibility & Pre-conditions
Before you begin, ensure you meet or can arrange the following:
- Citizenship or Entity Registration
You must be a Nepali citizen or have a company legally registered in Nepal. Companies should follow the Company Act. Land or Lease- You need a plot of land (or legally long-term leased property) that matches minimum land area, zoning, distance requirements.
- Some minimum sizes: in Kathmandu valley, sometimes 1.5 ropani; municipalities or urban places may require more.
- The land must satisfy other criteria: road frontage, access, distance from sensitive places (schools, hospitals, residential areas) etc.
- Distances / Zoning / Location Restrictions
- There are rules on how close to existing fuel stations you can be. For example, in major highways or cities, minimum distances are enforced.
- Must also respect local municipality zoning laws.
- Environmental & Safety Standards
- Environmental Impact Assessment (EIA) or at least Initial Environmental Examination (IEE) as per project scale.
- Fire safety compliance (fire extinguishers, alarm systems, structure standards).
- Other safety norms for storage tanks, dispensing equipment etc.
- Financial Capability
- Enough capital for land, infrastructure, equipment, working capital.
- Ability to provide bank guarantees or security deposit if required by NOC.
Documents Required
You will need to prepare and submit the following documents. The exact list may vary by region & municipality, but generally includes:
| Document | Details |
|---|---|
| Application form – NOC | Completed form from Nepal Oil Corporation for petrol pump license. |
| Company registration / Citizenship certificate | Depending on whether you are an individual or company. |
| Land ownership certificate or Lease agreement | For the site; proof of legal right to use the land. |
| Trace map / cadastral map / plot plan / site layout & architectural drawings | Showing layout of fuel storage, canopy, dispensers etc. |
| Environmental clearance / EIA or IEE report | As required under law. |
| No Objection Certificate (NOC) from local municipality or authority | For zoning, local approvals. |
| Fire safety certificate | From fire department or appropriate authority. |
| Tax clearance & VAT registration etc. | PAN, VAT (if turnover threshold exceeded), etc. |
| Proof of financial capacity | Bank statements, guarantees, capital investment plan. |
Process / Step-by-Step Approval Flow
Here is an outline of the steps to get everything done legally:
- Feasibility Study & Site Selection
- Choose location considering traffic, visibility, land cost, distances, zoning.
- Do due diligence on title, land ownership.
- Preliminary site plan.
- Apply / Wait for Notification
- Based on the Petroleum Products Seller Bylaws, the NOC issues notices every few years inviting applications for new ordinary sellers (fuel retailers) in certain locations. You need to apply when the notice is published.
- Submit Application with Required Documents
- Fill in NOC form, attach all required documents (see above).
- Include financial proof, environmental / safety clearances etc.
Preliminary Approval / Site Survey
- NOC and relevant authorities inspect the proposed site.
- They verify compliance of site location, distance criteria etc.
- Environmental & Local Approvals
- Get EIA / IEE approved by Department of Environment (if required).
- Get Local authority / municipality NOC / approval for zoning & land use.
- Construction / Infrastructure Development
- Once the above clearances are in place, build the infrastructure: storage tanks, canopy, dispensers, safety systems, road access, signage etc.
- Ensure everything meets safety, fire, environmental standards.
- Final Inspection by NOC / Authorities
- NOC and other bodies inspect the physical site to verify the infrastructure is as per plan.
- License Issuance & Fuel Supply Arrangement
- After successful inspection, NOC issues the seller / petrol pump license.
- Then start agreements for supply of petroleum products.
- Renewal & Ongoing Compliance
- The license will have a validity period (often 5 years) and must be renewed. Regular safety, environmental, tax compliance required.
- Reporting requirements: sales, stock, safety incidents etc.
Investment Costs & Financial Estimates
Below are rough cost estimates and financial requirements. These vary widely depending on location (urban, rural, highway, city centre), scale, land price, etc.
| Cost Component | Estimated Cost (NPR) / Range |
|---|---|
| Land acquisition / lease | Tens of millions (e.g. NPR 30-50 million or more in prime/urban areas) |
| Infrastructure construction (canopy, storage tanks, dispensers etc.) | NPR 15-25 million or more depending on scale. |
| Equipment & installation | Additional several millions depending on capacity. |
| Environmental, safety, licensing, documentation & approvals | Some millions (fees, consultancy, plans) |
| Working capital (fuel stock, initial operations, staff etc.) | Also several millions. |
| Bank guarantee / Security deposit with NOC or authorities | As mandated; possibly in the range of NPR 1-3 million or more depending on location. |
Example: Some sources estimate total investment (land + infrastructure + equipment + working capital) in urban or highway locations could be NPR 35 million to NPR 50+ million or more depending on scale. Rural setups will cost less, but still significant.
Timeframe
From start to operational petrol pump, the process can take anywhere from 6 to 12+ months in many cases, depending on:
- Efficiency in obtaining approvals
- Delays in environmental clearance
- Construction & infrastructure build-time
- Local municipality / zoning delays etc.
Common Challenges & Things to Watch Out For
- Delays / bureaucratic hurdles in approvals (NOC, environmental, municipality)
- Land disputes or unclear ownership titles
- Ensuring safety & environmental compliance to avoid penalties
- High upfront investment and securing financing
- Competition: existing petrol pumps nearby can affect viability
- Maintaining fuel supply chain & negotiation with NOC
- Fluctuating fuel prices & regulation changes
