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Court backs control of cooking gas trade

NEWS
By Kamau Muthoni | Feb 6th 2019 | 2 min read
By Kamau Muthoni | February 6th 2019
NEWS

An officer from Energy Regulatory Commission inspect some of the llegal gas cylinders during the crackdown of the gas business in Nakuru. The sale of counterfeit gas is costing traders 70% of their business which get lost to the cartels. [PHOTO:BONIFACE THUKU]

The High Court has upheld strict regulations on gas distributorship which lock out traders with less than 5,000 cylinders.

Justice Chacha Mwita’s decree means that cooking gas vendors will continue trading in pools, which require a trader to have a minimum of 5,000 cylinders to join the lucrative business.

Also, vendors cannot alter the brand name on the cylinders after buying them from marketers.

Justice Mwita, sitting at the Milimani Law Court, declined to invalidate a 2009 law that would have opened the market for consumers to fill their cylinders without strict controls on brands.

He ruled that the regulations - which were at the heart of a dispute on who owned gas cylinders - were justifiable.

The case was filed by a businessman, William Abok, in 2014 seeking to invalidate sections of the LPG rules, claiming that they conferred ownership of gas cylinders to the brand owners after sale to wholesalers.

Mr Abok also wanted the court to declare the LPG exchange pool unconstitutional. His contention was that the regulations were promoting monopoly among LPG marketers.

“The impugned regulations are unconstitutional and repugnant to the Constitution in so far as the same purports to take away the right to property arbitrarily and without any lawful justification,” Abok argued.

But Mwita said it was right to lock out traders who had no muscle to run the LPG business.

The judge was of the view that consumers’ safety and sale of quality gas were the reason the market should not be opened up for any person interested in the business.

“One has to appreciate that this is a sensitive sector with many challenges hence it requires fairly strict controls for the benefit of the people. Keeping out those who have no ability to carry out business in LPG cylinders for the sake of standards and safety is, in my view, permissible discrimination,” he ruled.

As at last year, the cooking gas distribution industry was controlled by 23 firms.

Wholesalers are required to apply for distribution rights and are supposed to sell to consumers based on the conditions set in the agreement.

One cannot fill gas or wholesale LPG cylinders unless they are members of the pool and must meet certain conditions set by a team comprising the Energy ministry, Kenya Bureau of Standards and marketing companies.

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