Fuel Distribution Contracts in Morocco: Regulation, Margins and Legal Risks

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Fuel distribution contracts in Morocco: a legal framework many operators discover too late

The publication of data on the gross margins earned in Morocco’s liquid-fuel market has changed the tone of the public debate. Since the Competition Council’s sectoral opinion of 2022 and the proceedings that resulted in commitments by several petroleum companies in 2023, attention has focused on import costs, pump prices, storage capacity and the margins retained at each level of the distribution chain.

Yet behind those economic figures lies a less visible issue: the fuel distribution contract in Morocco. This agreement determines who finances the service station, who owns the tanks and pumps, how the operator is paid, whether supplies must be purchased exclusively from one company, and what happens when the relationship ends. For many station operators, these clauses matter more to their survival than the headline pump price.

In twenty years of legal practice in Casablanca, I have seen service-station managers discover, usually after a dispute has begun, that they did not own equipment they had helped finance, that their margin could be modified unilaterally, or that leaving the network triggered a substantial contractual penalty. The signature had taken twenty minutes. The dispute took three years.

This article explains the Moroccan fuel distribution regulation applicable to petroleum companies, wholesalers, retailers and service-station operators. It also corrects several misconceptions. In particular, not every activity is covered by one generic “ONHYM licence”, Moroccan law does not establish a universal 60-day approval period for every petroleum project, and the former Competition Act No. 06-99 is no longer the principal legislation in force.

Why the margin debate has become a contractual issue

The Competition Council’s work has made the structure of the downstream petroleum market more visible. It has also encouraged distributors and station operators to compare their economic conditions. Two stations displaying the same brand may not necessarily receive the same remuneration: land ownership, throughput, transport costs, equipment financing and the legal form of management can produce very different arrangements.

Transparency at market level does not automatically give a retailer an unrestricted right to inspect all of a petroleum company’s internal accounts. It does, however, make vague price clauses harder to defend commercially. A properly negotiated contract should identify the applicable tariff, the operator’s margin or commission, the circumstances in which it may change, and the information used to calculate it.

1. The legal framework governing fuel distribution in Morocco

1.1 The 1973 Hydrocarbons Dahir remains the historical foundation

The starting point is Dahir No. 1-72-255 of 22 February 1973 on the importation, exportation, refining, refinery take-off, filling-centre operations, storage and distribution of hydrocarbons, published in Official Gazette No. 3148 of 7 March 1973. The title itself is instructive: Moroccan petroleum regulation is organised by activity. Importing, storing, filling liquefied-petroleum-gas cylinders and retailing fuel are not interchangeable legal operations.

The 1973 Dahir has been amended, notably by Law No. 37-04, promulgated by Dahir No. 1-04-237 of 31 January 2005. It must therefore be read in its consolidated form, together with its implementing decrees and ministerial orders. Quoting the original 1973 version without checking later amendments is risky.

The implementing framework includes Decree No. 2-04-663 of 5 January 2005. Technical orders also govern subjects such as petroleum-product specifications, storage installations, safety distances, metrology and fire protection. The exact texts applicable to a project depend on whether it concerns a depot, wholesale distribution, a filling centre or an ordinary service station.

Practical rule: an administrative authorisation for a petroleum activity and a private distribution agreement are separate legal instruments. The contract does not replace the authorisation, and the authorisation does not force a petroleum company to supply the applicant.

1.2 The DOC and Commercial Code govern the contract itself

The sectoral legislation answers the public-law question: may this operator carry out the activity, on which site and under what technical conditions? The Dahir forming the Code of Obligations and Contracts, commonly called the DOC, answers much of the private-law question: what did the parties promise each other, and what remedy follows a breach?

Article 230 of the DOC is central. It provides, in substance, that obligations validly formed take the place of law between those who made them and may be revoked only by mutual consent or in the cases provided by law. Article 231 adds that every undertaking must be performed in good faith and binds the debtor not only to what is expressly stated but also to consequences arising from law, usage or the nature of the obligation.

Under articles 230 and 231 of the DOC, a petroleum company cannot treat the written contract as binding only when it protects the company. Delivery commitments, notice procedures, agreed margins and territorial rights must also be performed in good faith.

Where both parties are traders and the agreement relates to their businesses, Law No. 15-95 forming the Commercial Code also applies. Accounting records, invoices, correspondence and established commercial practice may become decisive evidence. This is why station managers should keep delivery notes, price circulars, tank-calibration records and signed amendments for the full relationship and beyond the applicable limitation period.

1.3 Competition law: the applicable statute is now Law No. 104-12

Older contracts and commentary frequently cite Law No. 06-99 on freedom of prices and competition. That law is historically relevant, but it was repealed and replaced by Law No. 104-12 on freedom of prices and competition, promulgated in 2014 and later amended, notably by Law No. 40-21. The institutional framework is complemented by Law No. 20-13 on the Competition Council, as amended by Law No. 41-21.

Article 6 of Law No. 104-12 prohibits concerted actions, agreements and arrangements whose object or effect is to prevent, restrict or distort competition. Article 7 addresses abuse of a dominant position and abusive exploitation of a situation of economic dependence, where the statutory conditions are met. This distinction matters: discrimination is not automatically unlawful merely because two retailers receive different margins. It becomes legally significant when it forms part of a prohibited agreement, an abuse, or another actionable practice and cannot be objectively justified.

The Competition Council’s 2022 opinion on price increases for inputs and raw materials, particularly liquid fuels, examined the sector’s competitive structure. In 2023, proceedings involving nine fuel-supply companies resulted in a settlement and behavioural commitments, followed by monitoring reports. Those developments strengthen regulatory oversight, but they do not rewrite every existing service-station contract.

1.4 Which institutions do what?

The central administrative authority is the Ministry of Energy Transition and Sustainable Development, through the departments responsible for energy and petroleum products. Local authorities, civil-protection services, environmental authorities and municipalities may also intervene, especially for construction, classified installations, access, safety and land-use matters.

ONHYM, the National Office of Hydrocarbons and Mines, is a major public institution for hydrocarbon and mining exploration and development. It should not, however, be described as the universal licensing authority for every downstream service station. Depending on the activity, approvals and controls are handled by the ministry and other competent administrations. Applicants should verify the current procedure on the ministry’s portal and the national Idarati platform rather than relying on an outdated checklist.

The Competition Council investigates and monitors competition issues. Commercial disputes, meanwhile, generally fall within the jurisdiction established by article 5 of Law No. 53-95 creating commercial courts, subject to the nature of the parties, the claim and any valid arbitration agreement.

2. Regulatory approval for fuel distribution: conditions, process and real costs

2.1 There is no single licence covering every petroleum activity

The expression “fuel distribution licence” is often used loosely. Legally, the first task is to classify the proposed activity. Is the applicant importing products, operating a storage depot, distributing wholesale, supplying retailers, or managing a station belonging to an established network? Each model involves different infrastructure and authorisation requirements.

A service-station manager acting for an approved petroleum company does not necessarily hold the same sectoral approval as a wholesale distributor. Conversely, a commercial agreement naming someone a “distributor” cannot authorise that person to import or store petroleum products where the statutory approval for that activity is absent.

This classification should be completed before the land is purchased or leased. The site may be unsuitable because of town-planning restrictions, road-access requirements, safety distances, environmental constraints or title defects. Where the land is registered, the certificate issued by the Agence Nationale de la Conservation Foncière, du Cadastre et de la Cartographie must be checked carefully. A private lease is not proof that the planned petroleum use is administratively permitted.

2.2 Typical documents required

The exact file depends on the activity and the current administrative service sheet. A corporate applicant should nevertheless expect to produce its articles of association, recent commercial-register extract, beneficial-ownership and tax information where required, proof of the powers of the signatory, land title or lease, site plans, technical studies, safety documentation, insurance certificates and evidence of financial and technical capacity.

For installations, the authorities may require engineering plans showing tanks, pipework, vents, separators, filling points, traffic flow and firefighting equipment. Calibration and legal-metrology rules also matter. Product quality must comply with Moroccan specifications; the supply contract should therefore identify who bears the cost and risk if a delivered batch is contaminated or off-specification.

1. Define the regulated activity and confirm the responsible authority.
2. Audit the land and planning position, including title, permitted use and road access.
3. Prepare technical, safety and environmental studies using qualified professionals.
4. File the application and obtain a dated receipt identifying missing documents, if any.
5. Answer requests for additional information in writing and preserve proof of submission.
6. Do not commence regulated operations until the required approvals and commissioning documents are obtained.

2.3 Official deadlines versus administrative reality

One frequently repeated claim is that every fuel-distribution approval must be issued within 60 days. That is too categorical. Moroccan Law No. 55-19 on the simplification of administrative procedures and formalities requires administrations to formalise, publish and rationalise their procedures, but the enforceable deadline must be checked against the current service sheet for the precise authorisation requested. A depot project and a service-station file do not necessarily follow the same timetable.

On the ground, a technically complete project may still take several months once planning, civil protection, environmental, road-access and sectoral stages are combined. Four to eight months is a realistic planning assumption for many non-routine files, but it is not a statutory promise. Complex storage projects may take longer.

I dealt with an Agadir-area file in which the investor had completed most of the civil works before the administrative position was secure. Seven months of delay generated approximately MAD 310,000 in interest, rent and security costs. The lesson was painful: a contractor’s availability is not an administrative green light.

2.4 What should be budgeted?

Applicants should distinguish public fees from professional and project costs. There is no honest universal figure because land, storage capacity and environmental complexity vary enormously. For a standard station project, legal review may range from approximately MAD 12,000 to MAD 35,000 excluding tax; technical, architectural, topographical, safety and environmental work can readily reach MAD 50,000 to MAD 250,000 or more. These are market estimates, not statutory tariffs.

The contract should specify who pays for tanks, pumps, branding, point-of-sale systems, maintenance and decommissioning. It should also say whether equipment is sold, leased, loaned for use or retained by the petroleum company. Ambiguity here is one of the most expensive sources of litigation.

3. The legal anatomy of a Moroccan fuel distribution contract

3.1 Concession, franchise, agency or supply agreement?

Moroccan law does not impose one standard model entitled “fuel distribution contract”. The agreement is often legally hybrid. It may combine an exclusive supply arrangement, trademark licence, equipment loan, commercial lease, management mandate and services relating to a station network.

The title chosen by the petroleum company is not conclusive. A judge examines the parties’ actual obligations. A “management agreement” under which the operator sells fuel in the company’s name and receives a commission is different from a resale arrangement in which the operator buys the product and assumes price and stock risk.

The distinction determines who owns the fuel, who bears evaporation and shortage losses, who invoices the customer, who collects VAT, and whether the operator’s remuneration is a resale margin or a commission. In clear language, the economics must match the legal paperwork.

3.2 Essential clauses

No serious Moroccan petroleum-products supply contract should be signed without precise provisions on products, quality, quantities, ordering, delivery, transfer of title and risk, payment, security, insurance and incident reporting. Minimum-purchase clauses should account for closures, roadworks, force majeure, supply shortages and regulatory interruptions.

The contract should also allocate responsibility for contaminated fuel. Who samples the product? Is a sealed sample retained at delivery? Which accredited laboratory performs analysis? Who compensates customers whose engines are damaged? A vague quality warranty is not enough once thirty motorists arrive with repair invoices.

Safety duties should cover tank inspections, leak detection, firefighting equipment, staff training and emergency notifications. Employment responsibility must also be explicit: the party directing staff should not assume that a contractual label alone will prevent CNSS or labour claims.

3.3 Duration, renewal and investment recovery

Moroccan legislation does not establish a general minimum term of five or ten years for a fuel distribution contract. Under article 230 of the DOC, duration is primarily contractual, subject to mandatory law and competition rules. Five-to-ten-year terms are common where significant investment is required, but market practice is not a legal minimum.

The term should correspond to the investment’s realistic amortisation period. If the operator invests MAD 2 million in land and buildings, a two-year agreement terminable on three months’ notice transfers an unreasonable amount of risk to the operator unless a buy-out mechanism applies.

Automatic renewal clauses deserve particular attention. They should identify the renewal period, the notice deadline and the permitted method of notification. A clause requiring notice six months before expiry can trap an operator who sends an ordinary email that the other party later disputes receiving.

3.4 Exclusivity and non-compete clauses

A fuel-contract exclusivity clause in Morocco is not inherently unlawful. A network may legitimately require a branded station to sell only products meeting its specifications. But exclusivity must be assessed by duration, territory, market power, minimum purchasing requirements and its foreclosure effect on competing suppliers.

Articles 6 and 7 of Law No. 104-12 are the relevant competition-law references. A long exclusive term coupled with control of strategic infrastructure, discriminatory access or abusive dependence may attract scrutiny. There is no universal statutory rule declaring every exclusivity clause longer than a particular number of years void; the legal and economic context matters.

Post-contractual non-compete clauses should be limited by activity, territory and duration and justified by a legitimate interest. A clause prohibiting the operator from carrying on any petroleum-related activity anywhere in Morocco for ten years would be much harder to defend than a short, local restriction protecting confidential network information. A financial counterpart may strengthen fairness, but Moroccan commercial law does not impose one mechanical formula for every independent-distributor clause.

3.5 Can an independent station manager be reclassified as an employee?

Yes, where the facts reveal paid work performed under the authority and direction of another party. Article 6 of Law No. 65-99 forming the Labour Code defines the employee by reference to work performed for remuneration under the direction of an employer. Courts look beyond the contract’s title.

Indicators include imposed schedules, detailed day-to-day instructions, disciplinary control, inability to hire staff freely, absence of genuine commercial risk and direct integration into the company’s organisation. Brand standards and product-quality controls alone do not necessarily create an employment relationship; petroleum regulation naturally requires strict compliance. The question is whether those controls become a power to direct and sanction the person’s work.

Reclassification can trigger back pay, paid-leave claims, termination indemnities, damages and retroactive CNSS consequences. Published Moroccan case law on petroleum-station managers is fragmented, so it would be unsafe to cite unspecified Casablanca Court of Appeal rulings as though they created a binding general rule. Moroccan judgments are assessed case by case, and only the Court of Cassation’s published reasoning offers reliable guidance on general principles.

Operators facing this issue can consult employment lawyers in Casablanca, while commercial drafting should be reviewed by commercial-law counsel.

4. Transparency and margins after the Competition Council’s intervention

4.1 What the Council’s reports actually change

The Competition Council’s publications improve public understanding of import costs, distribution conditions and gross margins. The 2023 settlement and commitments by nine companies also introduced closer monitoring and reporting. However, they do not create an automatic statutory entitlement for every station operator to receive competitors’ contracts or the petroleum company’s complete cost accounting.

A retailer’s strongest information rights remain those expressly written into the agreement, those arising from good-faith performance under article 231 of the DOC, and those available through judicial evidence procedures in a genuine dispute. Confidential business information and competition law must also be respected.

4.2 How a margin clause should be drafted

A sound clause identifies whether remuneration is calculated per litre, as a percentage, through a commission, or through the spread between wholesale and retail prices. It states whether the figure includes VAT, card-payment costs, transport, evaporation allowances, promotional discounts and loyalty-program expenses.

In a Fès matter, an operator had accepted a fixed per-litre margin for five years without indexation, although wages, electricity and banking costs remained his responsibility. By the fourth year, the station’s operating account had been negative for eighteen months. Exiting early would have triggered a claimed penalty exceeding MAD 600,000. The dispute could have been avoided by a two-page review clause.

A balanced provision may include:

• annual review on a fixed date;
• an objective index or documented cost basket;
• a minimum operating margin, subject to lawful market conditions;
• advance written notice of tariff changes;
• a right to request supporting calculations;
• independent-expert determination where negotiations fail;
• a termination right if the agreed economic threshold cannot be restored.

Be careful with resale pricing. A supplier may recommend prices or operate within applicable regulated mechanisms, but arrangements that restrict independent pricing must be tested under article 6 of Law No. 104-12. The precise analysis depends on whether the operator is an independent reseller or an agent selling on behalf of the petroleum company.

4.3 Discrimination between comparable distributors

Two different margins are not, by themselves, proof of illegality. Differences can be justified by volume, logistics, investment, credit risk, land ownership or services. The operator should first establish that the compared stations are genuinely equivalent.

If less favourable terms result from collusion, dominant-position abuse or abusive economic dependence, a complaint to the Competition Council may be considered under Law No. 104-12. This is specialised work: economic evidence matters as much as contractual language. Assistance is available through Moroccan competition lawyers.

5. Termination and disputes

5.1 Termination for breach

Under article 259 of the DOC, where a debtor is in default, the creditor may seek performance where possible or termination with damages, subject to the applicable conditions. Contracts frequently add an express termination clause for non-payment, adulteration, repeated safety breaches, loss of approval or failure to meet minimum volumes.

A formal notice should normally identify the breach, supporting documents, contractual provision, cure period and intended consequence. Service through a commissaire de justice, the profession formerly referred to as huissier de justice, provides stronger evidence than a telephone call or unsigned email.

Do not manufacture a breach merely to escape a bad contract. Article 94 of the DOC provides the foundation of civil liability for the abusive exercise of a right where the legal conditions are satisfied. Good faith under article 231 also informs the analysis.

5.2 Unilateral termination and notice

There is no universal statutory minimum notice period applicable to every Moroccan fuel distribution contract. The written notice clause therefore matters enormously. For open-ended agreements, a sudden termination may still be challenged where it is abusive, contrary to good faith or inconsistent with established notice practice and legitimate reliance.

Evidence should include historical margins, investments approved by the company, depreciation schedules, remaining lease commitments, employee costs, correspondence and projected sales supported by prior figures. A claim based on optimistic turnover alone will be vulnerable.

5.3 Damages and penalty clauses

Damages may cover direct, proven loss causally linked to the breach, including unrecovered investment and lost margin where sufficiently certain. Double recovery is not permitted, and the injured party should take reasonable measures to limit its loss.

Article 264 of the DOC governs contractual damages and allows the court to reduce an agreed penalty where it is excessive or increase it where it is insufficient, subject to the statutory framework and proof of loss. A clause claiming five years of gross turnover is not the same as five years of net profit. Expenses saved after termination must be considered.

5.4 Emergency proceedings before the commercial court

Where termination threatens an immediate station closure, an operator may apply to the president of the competent commercial court for interim relief. Article 21 of Law No. 53-95 gives the president of the commercial court powers in urgent matters within the court’s jurisdiction, read together with the relevant procedural rules.

An interim judge generally avoids deciding a seriously disputed question on the merits. The applicant must show urgency and frame a genuinely provisional request, such as preserving the status quo, preventing removal of disputed equipment or ordering an expert assessment. A request to force indefinite supply despite major contractual disputes may be rejected if it effectively decides the case.

I once received a call on a Friday evening from a Casablanca operator whose supplier planned to remove branded pumps on Monday. The useful documents were not lengthy legal submissions; they were the signed equipment schedule, photographs, payment receipts and the notice delivered two days earlier. Evidence wins emergency cases.

5.5 Arbitration or Moroccan commercial courts?

Commercial fuel contracts may contain arbitration clauses. The current principal statute is Law No. 95-17 on arbitration and conventional mediation, promulgated in 2022. References in older templates to articles 306 to 327-70 of the Code of Civil Procedure and to Law No. 08-05 should be updated, because Law No. 95-17 created a modern standalone framework and repealed the former regime subject to transitional rules.

Arbitration can provide confidentiality and specialist decision-makers, but it is not always cheaper. Institutional fees, arbitrators’ fees and expert costs can be disproportionate for a small station operator. The clause should specify the seat, language, number of arbitrators, institution, appointment method and rules for emergency measures.

The Centre Marocain d’Arbitrage Commercial may provide an institutional framework. Parties should compare its current rules and fee schedule with court litigation before signing. Advice can be obtained from commercial arbitration lawyers in Morocco.

6. Ten checks before signing a fuel distribution agreement

If you remember one point, let it be this: negotiate the exit before entering the network. At signing, both parties expect success. That is precisely when notice, equipment ownership and compensation can be discussed calmly.

1. Regulatory status: identify every approval required and the party responsible for obtaining it.
2. Land rights: verify title, lease duration, permitted use and what happens to improvements.
3. Contract term: align duration with investment amortisation.
4. Margin formula: define all components, deductions and review dates.
5. Supply security: include delivery times, allocation rules and remedies for shortages.
6. Exclusivity: limit its products, territory and duration and test it under Law No. 104-12.
7. Minimum purchases: include exceptions for force majeure, roadworks and supplier failure.
8. Equipment: attach an inventory stating ownership, maintenance and removal rights.
9. Termination: specify notice, cure periods, investment compensation and stock repurchase.
10. Disputes: choose courts or arbitration knowingly, not by copying a foreign template.

Common mistakes seen in practice

The first mistake is signing the petroleum company’s standard form without negotiation. A standard contract is standard for its author, not necessarily fair to both sides. The second is confusing regulatory approval with a guaranteed supply right. The third is accepting oral amendments. If a regional manager promises an additional margin, free maintenance or territorial protection, insist on a signed written amendment.

The fourth mistake is failing to document investment. Before opening, have the premises, equipment and works photographed and recorded, ideally through a commissaire de justice where substantial sums are involved. Keep invoices and bank evidence. The fifth is ignoring the employment model: staff declarations to the CNSS, payroll responsibility and managerial control should correspond to the contract.

When legal advice is economically justified

A preventive review of a moderately complex service-station contract may cost roughly MAD 10,000 to MAD 30,000 excluding tax. Negotiation involving land, equipment financing, competition issues and regulatory work may cost more. Fees vary by lawyer, city and complexity and must be agreed transparently; these figures are indicative, not an official tariff.

By comparison, a commercial-court dispute involving expert evidence can last one to three years through appeal, sometimes longer if cassation and enforcement are involved. Legal fees, expert deposits, business interruption and immobilised investment quickly exceed the cost of preventive advice. Operators may consult contract lawyers in Morocco, energy-law lawyers or business lawyers in Rabat for administrative files.

Conclusion: transparency begins with the contract

Morocco’s fuel market is governed by several overlapping layers: the amended 1973 Hydrocarbons Dahir, Law No. 37-04 and its implementing texts, the DOC, the Commercial Code, competition law, labour law and the rules applicable to land, safety and the environment. No single “model fuel supply contract” can resolve all those issues.

The Competition Council’s work has created pressure for greater transparency, especially concerning margins and competitive conditions. But an operator’s day-to-day protection still depends on precise drafting: an objective margin formula, documented investments, proportionate exclusivity, workable notice and a realistic dispute-resolution mechanism.

Moroccan law offers remedies against contractual breach and abuse. Those remedies are strongest when the operator has preserved evidence and acted before the pumps are removed or supplies are cut. In practical terms, the best fuel-distribution dispute is the one prevented at the negotiation table.