EDA’s rejection of new LPG trade rules defeatist
The threat by the Energy Dealers Association (EDA) to go on strike should be dismissed by any right-thinking Kenyan.
Although the consortium has cited police harassment as the reason for the impending strike, its actions smack of an organisation averse to the new regulations meant to restore sanity in the Liquefied Petroleum Gas (LPG) sector.
It would be a blessing in disguise and good riddance if EDA makes good its threat and stops selling LPG to consumers.
The net effect of the association’s strike or boycott would mean the cylinders reverting to their brand owners and consumers benefitting from gas that has been filled legally and safely.
A critical analysis of the Petroleum Act 2019 and the Petroleum (LPG) Regulations 2019, which EDA is opposed to, paints a picture of a regulator, who after years of laxity, deems it appropriate to salvage a sector teetering on the brink of collapse.
There is no gainsaying that with strict enforcement, the new regulations would offer relief to customers who have sustained injuries, lost loved ones and even property to accidents occasioned by illegal gas refills.
Take, for instance, the licensing requirement. All businesses are currently required to obtain licences and one wonders why EDA wants to be an exception.
For LPG business, the law stipulates a simple procedure that entails making an application to the Energy and Petroleum Regulatory Authority (EPRA).
The Consumers Federation of Kenya and EDA are opposed to the regulations, arguing that many small retailers will be pushed out of business due to inability to pay licence fees.
The argument, however, does not hold water, given the reasonable levies. For instance, a licence fee for a retail LPG cylinders is Sh5,000 while a renewal costs Sh2,000.
Filling of LPG cylinders attracts a licence fee of Sh20,000 and Sh10,000 for renewal. On the other hand, operators of wholesale LPG cylinders will part with Sh8,000 for the licence and Sh5,000 for renewal.
Then there is the Sh10 million fine for illegal LPG operations, which EDA considers punitive.
Yet in reality, it is a deterrent to malpractices that have pervaded the sector over the years.
The cylinder pooling system, whose removal EDA bitterly opposed, is still possible under the new regulations, but through a mutual arrangement, where both parties must write to EPRA and the Competition Authority of Kenya (CAK) for approval.
Unless EDA has other reasons for objecting, this particular regulation should not be seen as a hurdle but a win-win situation, where both brand owners can track their cylinders.
From a consumer’s perspective, the LPG retailers are compelled to issue receipts with the following details: name, address and phone number of retailer; date of sale; cylinder brand; cylinder number or quick response code of cylinder; serial number; net weight in kilogrammes of the cylinder and unit and total cost of the transaction.
This is, no doubt, a step in the right direction. Many consumers hitherto did not know what to do in case of an accident. Another positive development is the fact that dealers are now compelled to report any accidents to the authority within 48 hours.
The above cited sections of the Act attest to the fact that it is meant to bring some semblance of order, including fair competition among the operators and safety of the consumers.
Indeed, the new regulations are in conformity with the principles of the Dublin-based World LPG Association —an umbrella of the global LPG industry.
In the Guidelines for the Development of Sustainable LPG Gas Markets, the association says that the distribution model for LPG in cylinders— especially in early-stage markets—must be defined in national law and regulation.
This enables the domestic LP Gas consumption by households and business to grow meaningfully in the medium term and for domestic LPG distribution system to remain commercially viable over the long term.
By opposing these regulations, EDA has shot itself in the foot, besides lending credence to allegations that it is an organisation that puts profit before lives. It’s time EPRA called its bluff. - The writer is a communications consultant with keen interest on hydrocarbons sector