State mulls blocking Dar gas imports on safety concerns

A man carries a cooking gas cylinder on Muindi Mbingu Street, Nairobi.  [Elvis Ogina, Standard]

The government is set to block the importation of cooking gas through its borders with Tanzania as it seeks greater oversight in the petroleum sub-sector in a bid to stem illegal refilling. 

The Energy and Petroleum Regulatory Authority (Epra) said on Monday it plans to review the law and restrict the importation of Liquified Petroleum Gas (LPG) through the Open Tender System (OTS). 

Through the system, petroleum industry players compete to import fuel on behalf of the industry, with the player offering the lowest bid for freight and premium getting the job. The country has for about two decades imported super petrol, diesel, kerosene and jet fuel through OTS. 

However, fuel importation through the OTS was suspended last year as the government implemented the government-to-government system in March last year, in a bid to slow down the weakening of the shilling and deal with the dollar shortage in the local market.

In the new system, the government contracted three State-owned Gulf oil companies to supply Kenya with fuel on a six-month credit period.

The deal was initially for nine months but was extended to December this year. 

Epra Director Petroleum Edward Kinyua said the regulator is reviewing a Legal Notice published last year to include LPG as among the fuels that local industry players will need to import under OTS.

The legal notice introduced the government-to-government system as among the modalities of procuring petroleum products for the country. 

He added that this aims to ensure that Epra and other State agencies have increased oversight of all cooking gas coming into the country, including the cylinder refilling plants where the gas ends up. 

“We are looking at reviewing the legal notice 3 of 2023 to include LPG as one of the products that will be imported through the tender system,” said Kinyua. 

Mr Kinyua spoke in Nairobi at a forum by the Petroleum Institute of East Africa to discuss the fight against illicit trade in the petroleum sector.

One of the problems that we have with LPG is that we have different sources of LPG. There is LPG coming through Oloitokitok and Namanga and that is a very porous way of bringing in LPG because some of it ends up in illegal sites.”

“There is merit in centralising how we import LPG so that we are able to account for that gas from when it lands to when it is sold or exported.”

Cooking gas importation was not included in OTS and has also not been subject to price control as the government cited inadequate storage facilities.

It now says there is increased private sector interest in putting up facilities as well as a planned bulk LPG handling facility by the Kenya Pipeline Company. 

The plan to have stricter rules in place for the importation of LPG is coming weeks following the explosion at an LPG plant in the Miradi area in Embakasi, Nairobi, which left 13 people dead and another 300 injured. 

Other than illegal refilling of gas cylinders, other illicit trade includes fuel adulteration and dumping of fuel meant for export markets, denying the government much-needed taxes. 

Principal Secretary for Internal Security and National Administration Raymond Omollo urged petroleum sector players to speak against the malpractices in the industry as a way of ensuring that Kenyans are safe and their businesses also thrive.

Industry players

He noted that LPG offers a cleaner fuel for Kenyan households but only when it is safe.  “There is a need for self-regulation. It helps a lot. If we have to sustain the gains, industry players have a responsibility to look after themselves. When we talk about counterfeits or illegal refilling of LPG, we know who is doing this but for some reason, we decide to look the other side or we pretend that nothing is going on and even when we speak about it, it is in hushed tones,” he said. 

“The regulator and law enforcement must do their bit. Access to reliable quality petroleum products is deeply intertwined with national security as it influences the security operations of the country.”

Dr Omollo added that as with any industry, the growth of the sector has resulted in the industry experiencing numerous challenges. “Growth in the industry has brought with it numerous challenges with the biggest one being the unauthorised refilling of petroleum products, especially LPG,” said Dr Omollo. 

“Illegal petroleum facilities, dumping of export petroleum products, adulteration and syphoning of products along highways are emerging as threats from sector cartels.” He noted that while the police are usually blamed whenever there are incidents, all players are usually to blame.

“We are all accomplices in these vices. You will find that the police are aware that there is illegal refiling at some particular point, the National Government administration officers are aware, you are aware and even the regulator is aware. But when these incidents occur, the default is to blame the police but they’re never alone, there is someone who is facilitating,” said Dr Omollo. 

“The petroleum sector continues to harbour rogue business people while some elements within our law enforcement agencies have been compromised thus the need to enhance intelligence-led enforcement.”

The uptake of cooking gas has been on the rise in the last decade, growing from about 93,600 tonnes in 2012 to 360,000 tonnes last year. 

Financial Standard
Premium Ruto caught in a Catch-22 over IMF and restless Gen Z demands
Financial Standard
Premium The big ask: Inside Treasury's 'unlikely' plan to lower gaping budget deficit
Safaricom denies sharing customer's data
Financial Standard
Tea producers mull key changes to stem falling prices and demand