Caspian Report - Issue 06 - Winter 2014

• Removing the obligation of 60 thousand
tons for distributors;
• Limiting the 45% market share;
• Establishment of distribution companies
by refineries;
Under the current Petroleum Market
Law No. 5015, Article 2, the definition
of petroleum covers petroleum products,
naptha (except for raw material,
solvent naptha) kerosene, jet fuel, diesel,
fuel-oil, and other products determined
by the Institution. In the new
draft, Autogas LPG, Autogas LNG and
Autogas CNG are also included in the
definiton.
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• Freedom of promotion;
• Transferring bottled LPG and market
surveillance authority to the Ministry
of Industry;
• Publishing regulations within 6
months.
The draft proposes fundamental
changes in many areas, such as transferring
the automation system to the
Ministry and amending the Law on
the Organization and Duties of the
Ministry of Energy and Natural Resources
to make the Ministry responsible
for regulating the petroleum
market . In addition, the Law on the
Petroleum Market No. 5015 and the
Law on the LPG Market No. 5307 are
to be abolished.
Detailed information on the abovementioned
issues is set out below:
DEFINITION OF PETROLEUM
This draft includes the regulation of
oil, LNG and CNG markets. Bulk and
bottled use of LPG and LNG is not included
in the scope of the law; thus
petroleum, auto LPG, auto LNG and
auto CNG markets are gathered under
the umbrella of a single law.
DEFINITION OF INDEPENDENT
DEALERSHIP
A dealership is defined as a natural and
legal person possessing the necessary
equipment to operate a dealership; in
the current law (Art. 2) a dealership is
defined as with and without stations.
The dealers are obliged to draw up a
contract with a distributor company
to be able to issue sales. They are described
as contracted dealers, as they
make exclusive contracts.
ACCORDING TO THE DRAFT, NATURAL AND LEGAL
ENTITIES THAT ARE ESTABLISHED IN COMPLIANCE
WITH THE REGULATIONS CONCERNING BUSINESS
ESTABLISHMENT, WORK, TECHNICAL, QUALITY AND
SECURITY ISSUES WITHOUT HAVING DRAWN UP A
CONTRACT WITH ANY PETROLEUM DISTRIBUTION
COMPANY ARE DEFINED AS INDEPENDENT DEALERS.
However, the new draft coins a new
definition, that of an “independent
dealership”. According to the draft,
natural and legal entities that are established
in compliance with the regulations
concerning business establishment,
work, technical, quality and
security issues without having drawn
up a contract with any petroleum distribution
company are defined as independent
dealers.
Distributors shall inform the Ministry
about the dealer, the dealership
agreement and termination of the
agreement within two working days