Distributorship Agreement

For PAKGAS

Executed between

Pakistan State Oil Company Limited

And

______________________________

Dated: _______________

Region: ___________

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 DISTRIBUTORSHIP AGREEMENT
FOR
LIQUIFIED PETROLEUM GAS (LPG)

This Agreement (“Agreement”) is made on this date____of____________ 20___.

By and between

PAKISTAN STATE OIL COMPANY LIMITED, a company incorporated under the

Companies Act, 2017 having its registered office at PSO HOUSE, Khayaban-e-Iqbal, Clifton,
Karachi (hereinafter referred to as “PSO” which expression shall unless repugnant to the
context, include its successors-in-interest, authorized representatives and permitted assign) of
the ONE PART

And

M/s./Mr._______________________________ a Pvt. Limited /Limited /Partnership

/Proprietorship concern under Business Name of M/s._________________________________
(here in after referred to as ‘DISTRIBUTOR’ which expression shall, unless repugnant to the
context, Include legal heirs, authorized representatives, executors, successors-in-interest &
permitted assigns) of the OTHER PART.

AND WHEREAS;

A. PSO is engaged in the business of storage, marketing and distribution of various petroleum
products in Pakistan;

B. Distributor has requested PSO for appointment as distributor of Liquefied Petroleum Gas
(here in after called ‘PAKGAS’) and to sell PAKGAS to sub-distributors and retailers for re-
sale in the market within the assigned Sales Area by PSO (here in after referred to “SALE
AREA”) and PSO has accepted the request of the Distributor;

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 C. As required by clause 4 of this Agreement, Distributor has deposited a sum of
Rs. 100,000/= (Rupees One Hundred Thousand only) here in after called ‘DISTRIBUTORSHIP
DEPOSIT’ with PSO as security against the performance of the Distributor as contained in this
Agreement;

D. It has been agreed by both Parties that the appointment of the Distributor as a Distributor of
PAKGAS shall be governed by the terms and conditions of this Agreement.

PSO and Distributor may be referred to as “Party” individually and “Parties”

collectively.

NOW, THEREFORE, it is agreed and declared by PSO and the Distributor as follows: -

1- a) PSO hereby appoints the Distributor as a non-exclusive distributor of PAKGAS in the Sales
Area and Distributor accepts the appointment on the terms and subject to conditions in this
Agreement;

b) The Distributor undertakes that it shall make every effort to promote the sale of PAKGAS in
the Sales Area in order to meet the sales volume targets from time to time fixed by PSO for the
Sales Area and to faithfully keep fulfilling the requirements of the criteria of the distributorship
of PAKGAS established by PSO and requirements of OGRA;

c) The Distributor shall provide efficient after sale service to the customers;

d) The Distributor shall not sell PAKGAS outside the Sales Area. In case of violation PSO shall
issue a warning letter to the Distributor and in case of continued non-compliance for a period of
7 days from the date of warning letter, PSO may terminate this Agreement with immediate effect
without any further notice;

e) The Distributor shall use ‘PAKGAS’ logo or ‘Authorized Distributor’ in any form of
communication only after the approval of PSO.

2- Notwithstanding the appointment of the Distributor as Distributor of PAKGAS in Sale Area,

PSO reserves the right at all time to make direct sale of PAKGAS to any person and may also
appoint other distributors for PAKGAS in the Sales Area if it considers expedient.

3- This Agreement has been entered into by PSO with the Distributor in reliance of the surety given
that necessary approval and authorization is in place to execute this Agreement and that no
dispute whatsoever is pending regarding the ownership or any other matter with respect to the
Distributor or any of its business functions.

4- The Distributor shall maintain Distributorship Deposit of Rs. 100,000/- (Rupees One Hundred
Thousand only) as security for the due and faithful performance of his obligations under this
Agreement. Neither Distributorship Deposit nor Security Deposit for cylinders received by PSO
under clause-5 below shall carry any interest or return what so ever and no claim shall be
entertained by PSO for the same.

5- In addition to the said Distributorship Deposit, the Distributor shall make further deposit of such
amounts as shall be prescribed from time to time by PSO as Security for the cylinders and other
equipment (herein after collectively called “LPG Equipment”) supplied by PSO to the
Distributor for further supplies to the Consumers. The Distributor shall obtain cylinders from
PSO upon such terms and conditions as may be determined by PSO and in such adequate
quantities as shall be compatible with the sales volume targets from time to time fixed by PSO
for the Sales Area.

6- Notwithstanding anything contained herein, the Distributor hereby authorizes PSO to utilize all
or any amount of Distributorship Deposit and/or Security Deposit in its business activities.

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 However, nothing shall absolve PSO from refunding the Distributorship Deposit and Security
Deposit to the Distributor subsequent to expiry or early termination of the Agreement, after
deduction of all dues/liabilities etc., if any.

7- The Distributor shall strictly observe and comply with all the rules regulations, policies and
standards on health, safety and environment as laid down and advised by PSO.

8- PSO shall supply to the Distributor such quantities of PAKGAS as per the requirement of the
Distributor in view of the sales potential of the Sales Area and Distributor Performance,
however, the Distributor will be required to make sure that sales of PAKGAS should be
consistent and targets are met. In case of product shortages, PSO will restrict upliftment by the
Distributor through fixing daily, weekly, or monthly allocation of PAKGAS for the Sales Area
as deemed appropriate.

9- a) PAKGAS shall be made available by PSO at the price established by PSO for sale to the
Distributor and in effect on the date on which supplies are dispatched by PSO. The change in
price(s) shall be the sole prerogative of PSO which may be implemented on immediate basis
and shall apply to all deliveries by PSO to the Distributor on that date. Where Distributor’s
indents for any deliveries executed on the same date on previous prices, the Distributor will be
liable to pay the difference in prices on the very next day before execution of next day deliveries.

b) The Distributor will be required to pay in advance, the payment of required deliveries as per
indents approved by PSO through either online payment or through DD/SDD drawn in any
scheduled Bank in Karachi payable to ‘PAKISTAN STATE OIL COMPANY LIMITED’.

c) The Distributor shall sell PAKGAS to the Consumers at prices not more than the maximum
consumer prices notified by OGRA for the given month. PSO will also publish maximum
consumer prices in major cities in the newspaper up to 10th of each month for that month. The
Distributor will be solely responsible to ensure that PAKGAS should be sold to the consumers
within notified maximum consumer price by OGRA and in case of any non-compliance, will be
solely responsible for the action taken by OGRA as well as PSO including but not limited to
penalty imposed by OGRA and/or PSO and termination of this Distributorship Agreement.

d) The Distributor shall not be entitled to any additional commission over and above the
margins on the sale of PAKGAS to the consumers within the notified maximum consumer sales
prices by OGRA or any costs or expenses incurred by him in selling PAKGAS or in the
performance of his obligations under this Agreement.

e) The Distributor shall engage and employ sufficient and adequate staff for the performance of
its obligations under the Agreement.

10- The sale of PAKGAS by PSO to the Distributor shall be made on a principal to principal basis
and the Distributor shall not be an agent of PSO. The Distributor will not represent himself as
an agent of PSO or will enter into any commitments on behalf of PSO or give any declaration
warranties or guarantees in respect of the PAKGAS or LPG equipment other than those already
given by PSO as communicated in writing to the Distributor.

11- PAKGAS delivered by PSO to the Distributor shall be sold only in the cylinders form in which
the same shall be supplied by PSO as filling from one cylinder to another is not only illegal as
per law, rules and policy of the OGRA and PSO but also highly dangerous. The Distributor will
ensure strict compliance to all regulatory requirements failing which strict action will be taken
by Authorities, Departments, OGRA and PSO. Such cylinders will not be labeled, relabeled,
tampered or marketed in any manner by the Distributor. Furthermore, the Distributor shall not
obliterate, erase or change any markings, wordings, trademarks or other writing or signs of PSO
on the cylinders or LPG Equipment.

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 12- The Distributor shall be responsible for the recovery of LPG equipment from a consumer
who/which has ceased to purchase PAKGAS and to refund to him the amount of his security
deposit after any adjustments. In case the Distributor is unable to make recovery of LPG
equipment from consumer, the Distributor shall be required to pay PSO, the replacement value
of such LPG equipment as determined by PSO.

13- The Distributor shall not be entitled to any commission in respect of direct sales made by PSO
in the sales area.

14- The Distributor shall in normal course, sell PAKGAS against cash but in case any credit is given
by him to his customers, such credit shall be at his sole risk and responsibility and shall not in
any way affect the Distributor’s liability to PSO under these presents.

15- The Distributor shall make sale only of such quantities of PAKGAS as will be in his actual stock
at the date of the sale and shall not offer/book any advance sale for any quantities of PAKGAS
which will be in excess of the quantity remaining in his actual stock, save and except with the
written prior permission/confirmation of PSO in any particular case.

16- The Distributor shall take every responsible precaution against declaration of quantity and
quality of PAKGAS and shall not in any way directly or indirectly compromise on PSO’s
standard of quantity/quality of PAKGAS as delivered under these presents.

17- PAKGAS shall be sold by the Distributor on ‘Full Weight or Measure’, in case of any shortage
of quantity in any cylinder to the consumer, Distributor will be solely responsible to compensate
the consumer in such cases for any short quantities. Cost of all such additions shall be borne by
the Distributor.

18- The Distributor shall at his own expense arrange for suitable premises for storage/
accommodation which meets all safety requirements as specified by OGRA and PSO from
time to time for storing PAKGAS filled as well as empty cylinder & other LPG equipment
and shall also at his own expenses procure and obtain such permits/approvals license or
licenses as may be required under prevailing laws, rules or regulations applicable from
time to time for storage, transportation and sales of liquefied petroleum gas and explosive
products.

19- The Distributor shall maintain all records of LPG equipment given to the customers and ensure
that cylinders should be refilled only from PSO and not from any other Marketing Company’s
Plant. If the Distributor is found filling of PAKGAS cylinders from any other company, PSO
will take strict action and may confiscate all cylinders filled from other Plants, cancel the
Distributorship, withheld Security Deposit for Cylinders and Distributor Deposit.

20- Where PAKGAS is delivered by PSO to the Distributor using its own transport or the transport
of a contractor, the delivery point shall be the Distributor’s premises designated by him for this
specific purpose. However, if the Distributor himself takes delivery of PAKGAS using his
own transport, the delivery point of PAKGAS may be Distributor’s place, sub-distributor place
or customers place. All risk and title to PAAKGAS shall pass on to the Distributor or his
representative at the delivery point i.e. PAKGAS LPG Plant and he will be responsible for
quantity, quality and any loss/leakage after delivery of PAKGAS to him. PSO shall not be
responsible for the cost of delivery of any LPG equipment by the Distributor to the consumer
or vice versa.

21- a) The Distributor shall indemnify and keep indemnified PSO, its officers, employees and
representatives, harmless, at all times, from and against all claims, demands, actions, suits,
proceedings, liabilities, damages, penalties, costs, charges, fines, expenses, losses etc., of whatsoever
nature, from any authority/forum/third party or any other entity whatsoever, which may be incurred,
suffered or sustained, directly or indirectly, by PSO or any of its officers, employees or
representatives arising from or pursuant to this Agreement or consequent to any act and/or omission

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 and/or negligence, and/or failure to comply with the terms and conditions of this Agreement by the
Distributor and/or any of its staff, employees, representatives, contractor, contractor’s staff or any
other person acting for and on behalf of the Distributor.

b) At any time, even after the expiry of this Agreement, the Distributor shall, without prejudice to
its liability towards third parties for damages sustained, indemnify and hold PSO, its officers,
employees and representatives, harmless against any cost, expense and/or damage (including
sanctions and/or administrative, legal and/or court costs) borne by PSO, including but not limited to
any third party claims or any claims by judicial and/or administrative authorities, arising from defects
of the products sold by the Distributor at the Licensed Premises or connected with the Distributor’s
product failed worthiness or lack of safety or non-compliance with laws or rules.

c) The Distributor shall also indemnify and keep indemnified PSO from and against all claims,
demands, damages, expenses etc. for any personal injury including death, disease or loss of or
damage to any third party due to use/utilization of any product sold by the Distributor at Licensed
Premises. The Distributor shall be solely responsible for all such claims whatsoever by any third
party / general public.

22- The Distributor shall not without PSO prior consent in writing transfer this Agreement or any
part here of and rights, obligations subsisting under this Agreement to any person of persons,
firm or company whatsoever.

23- The Distributor shall on all his commercial letters & documents & on the name plate or other
indicia of his place of business describe himself a Distributor for PAKGAS and PSO. The
Distributor shall prominently display at his registered sale point PAKGAS logo sign, trade name
& colour schemes and other publicity material supplied by the PSO. The Distributor shall keep
his sale point clean tidy and presentable at all times and shall conduct its business so as
to promote the good reputation of PSO, to increase the sale of PAKGAS brand and to
ensure that customers are given prompt, courteous and efficient service of standard to the
satisfaction of PSO. However, it will be mandatory for the Distributor to keep its sale point as
per the specified HSE and other standards of OGRA and PSO at all times.

24- Any notice required to be given to the Distributor by PSO shall be deemed to be duly received
& served on the Distributor if such notice has been addressed & posted by mail / telegram
telex/post A.D. or a reputed courier service to the Distributor at his business address. Any notice
required to be given to the Company by the Distributor shall be deemed to be duly received by
& served on the Company if such notice has been addressed to the Company at its registered
office & has been sent by registered post A.D. or a reputed courier.

25- a) The Distributor shall prepare a daily sales record. All documents including but not limited to
sales, credit sales, returns of stocks & sales etc. as may be required by PSO shall be made
available and all accounts of sales and deposits, stock & sales register shall be produced for the
inspection of the PSO’s representatives at any time when called upon to do so.

b) As and when required by PSO, the Distributor shall acknowledge, reconcile & confirm or
point out discrepancies, if any, in the monthly sales and upliftment record. Furthermore, the
Distributor shall maintain his records & accounts in a manner to enable prompt reconciliation by
any officer or PSO and shall provide such statistical & other information statement and
particulars as PSO may from time to time require.

26- The Distributor shall not indulge in hoarding, black marketing, creating artificial shortage or
cross filling of PAKGAS, or in any other illegal practice as per OGRA requirements/PSO
policies and/or law of the land.

27- This Agreement shall be deemed to have commenced from the date of first upliftment of
PAKGAS from PSO and shall continue until terminated by PSO.

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28- a) Distributor shall ensure that he and his employees, agents or representative do not, during
the continuance of this Agreement and at any time after the termination of this Agreement
howsoever caused, divulge any information in relation to PSO’s trade secrets, techniques,
business or method of carrying on business.

b) Distributor shall maintain strict secrecy about the methods of the PSO including the
information manuals, if any, issued by the PSO, any technical know-how, trade secrets, product
information, market opportunities, advertising and publicity materials belonging to PSO, both
during and after the currency of the Agreement.

c) The Distributor and its authorized representative, agents, contractors, or other staff shall not
disclose any Confidential Information which came to his knowledge under this Agreement to
any other person or party.

d) Distributor shall take all steps necessary to ensure that the Distributor’s nominees, employees
and agents also observe such requirements of secrecy as stipulated in the previous clause and
shall cause such nominee, employees, or agents to enter into a secrecy agreement.

29- Subject to the exception appearing in clause 29 immediately hereafter it shall be lawful for either
of the parties hereto terminate this Agreement by giving to the other party thirty (30) days’
notice in writing. The Agreement shall be deemed to have come into force from the date of
Appointment or First supply of PAKGAS received from the Distributor shall continue till the
Termination of Distributorship by PSO.

30- Notwithstanding anything, if the Distributor shall be adjudicated insolvent (or being a company
shall go into liquidation than and in such cases, this Agreement shall automatically be
terminated and in the event of the breach by the Distributor of any of the terms hereof PSO
shall be at liberty to terminate this Agreement, at any time by a notice in writing to the
Distributor.

31- Upon the termination of this agreement whether by notice or otherwise the Distributor
shall hand over forthwith to PSO all unsold stock of PAKGAS in the custody of the Distributor
along with plant, machinery LPG equipment & any other equipment belonging to PSO and
shared with or supplied to the Distributor in terms of this Agreement which is in the custody
or possession of the Distributor. The Distributor shall also return / handover PSO all consumer
agreements/forms for loaning of LPG equipment and any other relevant details in his
possession belonging relating to the Distributorship under this Agreement. Notwithstanding
the above, PSO shall be at liberty to forthwith, through its officers or representatives, enter
upon any premises where such products and documents are stored and take possession thereof
and remove the same without being liable for trespass or otherwise.

32- It is agreed and declared that all plant, equipment, cylinder, other LPG equipment or machinery
supplied by PSO to the Distributor, in connection with facilitating the Distributor of PAKGAS
in the Sales Area, shall always remain the exclusive property of PSO and the Distributor shall
not have any right to sell, charge or create a lien on the same.

33- Upon receipt of the stock handed over to PSO’s representative pursuant to the foregoing
provisions, the Company will refund to the Distributor the value of the stocks so received at the
authorized selling rate after any deductions, depreciation on the stock, charges of the Company
to the Distributor of PAKGAS at the date of the receipt there as aforesaid If the distributor fails
to hand over cylinders to PSO, then in such case, PSO may forfeit the entire distributorship
security deposit once for all and the same will not be claimed by distributor.

34- Upon the termination of this Agreement by notice or otherwise, PSO shall make and prepare a
final account in respect of all dealings between the parties here to under these presents and any

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 amount which may be found to be due by either of the parties hereto the other shall pay within
10 (ten) days from the completion of such final account. The Distributor shall accept as correct
final account so made or prepared by PSO and the same shall be final and binding on the parties
hereto and shall not be questioned except for any manifest error which may be apparent on the
face of it.

35- The Distributor shall treat as secret and confidential all information acquired from PSO during
the period of this Agreement including, but not limited to the generality of the foregoing, the
policies of PSO and the results of any investigation or inquires carried out or reports and
recommendations made by PSO hereunder, and the Distributor shall not disclose any such
information to any persons without prior written consent of the Company. The Distributor shall
upon request provide PSO with all its customers’ data and market information or any other
information acquired during the period of this Agreement.

36- If any question, difference or the objection whatsoever, or any other dispute of whatever
nature shall arise in any way connected with or arising out of this Agreement or the
meaning or operation or any part here of or the right, duties or Liabilities of either party
under this Agreement, than every such matter, the dispute of difference shall be referred
for arbitration to General Manager – Commercial Fuels / Gaseous Fuels or his nominee or
such other officer as PSO may designate and his decision/award shall be final and binding on
both the parties. Any arbitration under this Agreement shall be held at Karachi. Without
derogating from the arbitration provisions of this clause, it is agreed that only the courts of
Karachi will have exclusive jurisdiction in all matters connected with this Agreement.

37- This agreement supersedes any previous agreement between the distributor and the Company.

In witness whereof these presents have been signed by or on behalf of the parties on the day and
year herein above written.

__________________________________ ___________________________________

FOR & ON BEHALF OF FOR & ON BEHALF OF

PAKISTAN STATE OIL COMPANY LTD. DISTRIBUTOR

WITNESSES:

1._________________ 1. ____________________

2._________________ 2. ____________________

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