• Consumer Federation of Kenya has said new regulations by the energy regulator that Liquefied Petroleum Gas cylinder traders must have permission from brand owners will cause a shortage in the market
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New regulations by the energy regulator that Liquefied Petroleum Gas cylinder traders must have permission from brand owners will cause a shortage in the market, Consumer Federation of Kenya has said.
Cofek secretary-general Stephen Mutoro has said regulations will lead to monopolistic competition and eliminate traders such as Dukas afraid of carrying out business without an authority's license and work permit.
“The move will restrict business to the brand's dealers like petrol stations and affect consumer's convenience that comes from quick access to dukas,” Mutoro said.
“The licence should be inclusive of consent, otherwise it will affect SMEs and have consumer competition narrowed to specific dealers and lead to the increased price to the end consumer."
On August 28, the Energy and Petroleum Regulatory Authority published new regulations in local dailies saying that all LPG cylinders retailers including shops and supermarket outlets, wholesalers and transporters are required to acquire a licence from the authority for each business location and shall be specific to the authorised cylinder brands only.
“(They) shall henceforth not undertake the business of retail, wholesale or transportation of cylinders of another brand owner without prior written consent from the brand owner, failure to which it shall be considered as an offence,” EPRA added.
Anyone who commits the offences will be fined Sh10 million or more, a term of imprisonment of five years of more or risks the withdrawal of their operating license.
Mutoro said that issuance of brand owner permit to all traders was close to impossible.
"Most LPG providers are not located across the country and therefore should allow other parties to sell the cylinders," he added.
He said the license to ensure traceability in case of leakage of the cylinder, whereas a consumer would need replacement or compensation.
However, according to a member of the LPG exchange board, providers will licence distributors who in turn are only limited to give permit six dealers.
This is the regulator's second regulations following restrictions on the exchange of empty gas cylinders with a different brand.
The revised regulations in the shift from the mandatory cylinder exchange pool allowed consumers to choose whether to retain the current cylinder or return them to brand owners in exchange for deposit cash to buy alternative ones.
The directive that was passed in July was contended by activist Omkiyo Omtata saying they were punitive to consumers and stakeholders.
According to Mutoro, EPRA is not doing enough with stakeholders through sensitisation as most people are not aware.
"Most of these regulations, therefore, come out as impunity or in favour of certain sections,” Mutoro added.
EPRA has stated that the regulations aim to curb unauthorized LPG cylinder filling and enhance consumer safety.
Mutoro said the work toward a principal-agent relationship means that brand owners are worried about revenues or quality, however, the authority can't have the responsibility of right of ownership to the third parties.