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The Nairobian

Counties to license fuel retailers as ERC steps up war on adulteration

Business

By Dalton Nyabundi | Dec 22, 2016

Kisumu county governor Jack Ranguma (right) with the Energy Regulatory Commission (ERC) Director General Joe Nyaga during a press briefing in Kisumu county on December 20 2016. ERC has appointed Kisumu county as a licensing agent for petroleum and LPG business. PIC BY COLLINS ODUOR

Energy Regulatory Commission (ERC) plans to appoint the 47 county governments as licensing agents for retailers of oil products as part of efforts to combat fuel adulteration menace.

Last week, ERC appointed Kisumu the first such agent, meaning all retail dealers of petroleum and liquid petroleum gas (LPG) within Kisumu will as from January 1 apply for their licences through the county government.

Speaking during the commissioning of the deal between ERC and Kisumu, ERC Director General Joe Ng'ang'a said devolution of licensing duty to the counties was expected to make monitoring of retailers across the country easier.

Kisumu is being used to pilot the project. The lakeside town is one of the three towns – Kisumu, Eldoret and Nakuru – notorious for adulteration. The three are major exit points for fuel meant for export.

"In the spirit of devolution the commission seeks to decentralise its operations by empowering those on the ground to help drive our agenda. Eventually we hope to have all the counties license operations within their boundaries," he said. He said basing all operations of the commission in Nairobi derailed the fight against adulteration.

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"Adulteration of fuel remains a big challenge and a threat to our economy which we must tackle, this is why we are bringing on board the devolved units to help us monitor activities of point of retail agents in their territories," said Ng'ang'a.

The commission has already trained officers in Kisumu on monitoring and inspection of the retailers in readiness for the January roll out. On Tuesday, the commission held a sensitisation workshop with other stakeholders over the planned delegation of the licensing duty.

Other long-term efforts to curb the vice, Ng'ang'a said, include gradual elimination of kerosene from the local market by offering alternative 'clean' lighting and energy sources such as solar and cheap electricity.

The sellers of adulterated fuel add kerosene to it to increase its volume. This negatively impacts on motorised machines, with effects on motor vehicles taking effect from as low as 100km of driving, according to Mr Ng'ang'a.

The ERC believes the vice is fuelled by the relatively significant profit margins the petroleum business enjoys.

Ng'ang'a said the local market for fuel had grown on emerging new industries and expansion of the commuter industry including the boda boda business over the past five years, gains which he said were being clawed back by adulteration menace.

The number of marketers for petroleum products grew two-fold from 47 to 87 over the past five years while petrol stations increased from 1,382 to 1,707.

In September last year, 56 petrol stations were black-listed after ERC launched a retailer self-test kit. These failed to comply with the stipulated regulations with regards to adulteration of fuel.