Oil marketers kicked out of energy regulator’s board

Judge Weldon Korir at the Malindi High Court. [Nehemiah Okembah, Standard]

Oil marketing companies have been locked out of the Energy and Petroleum Regulatory Authority (EPRA) board over conflict of interest concerns.

The High Court last week nullified the appointment of Macharia Irungu as a director at the energy industry regulator until a case to determine whether his presence at the board would be in conflict of interest.

Dr Irungu is Total Kenya’s Director of Strategy and Corporate Affairs.

Total is one of the largest oil marketing companies in the country, and according to Consumers Federation of Kenya (Cofek), having a seat on the EPRA board would largely benefit the oil marketers to the detriment of the consumer. High Court Judge Weldon Korir, sitting in Nairobi, nullified February’s appointment of Dr Irungu by Energy Cabinet Secretary Charles Keter through a Gazette notice.

In the Gazette notice, Keter had also appointed Prof George Achoki and Dr Kebenei Sellah as directors of EPRA, who will also be affected following the suspension of the notice.

“It is hereby ordered that pending hearing and determination of this application interpartes, a conservatory order be and is hereby issued staying and or suspending the Kenya Gazette Notice of 1221 of February 8, 2019 by the Cabinet Secretary Energy to appoint the second interested party (Dr Irungu) to the board of the first interested party (EPRA),” reads the judgement in part.

The case will be heard on September 17. The consumer lobby had argued that EPRA as the regulator might not be impartial when dealing with Total because of  Irungu’s influence on the board.

While it is common practice to have private sector members as board directors in regulatory bodies, these are rarely drawn from private players that are policed by the regulators.

Energy Principal Secretary Joseph Njoroge had defended the appointment, noting that the law offers private sector members seats on the EPRA board.

He had also argued that having players on the regulator’s board offered an opportunity for self-regulation as well as enabling the Government to refrain from over-regulation.

Excessive action

“It should be noted that the rationale for appointing five persons from the private sector to the Commission is to ensure the interests of the private sector, which is among the biggest stakeholders in the energy and petroleum sectors, are represented in the highest organ of the regulator. This in itself is a safeguard against excessive actions by  State organs in the regulation of the sector,” said Njoroge in an affidavit responding the claims by Cofek.

He added that each of the board members represented certain interests and that they are all appointed to ensure a balance of the State and private sector interests.

“The commissioners representing the State would be deemed to be excessive in, for example, over-regulating with the objective of the unduly increasing State power and State revenues to the detriment of consumers and the private sector,” said the PS.