Illegal trade thriving in spite of crackdown on LPG black market

Illegal Liquefied Petroleum Gas (LPG) dealers have re-emerged in the wake of the tightening of regulations meant to tame the dangerous trade that continues to endanger the lives of millions of consumers.

Cartels that illegally import cooking gas through porous border points have taken advantage of the transition period before the new, stringent rules are enforced, to set up illegal refilling dens in various parts of the city, including in residential areas, to make a killing.

Mainstream LPG dealers have decried the loss of thousands of cooking gas cylinders in the past one month, which are stolen while in transit or simply collected from circulation to deny genuine dealers millions in revenues.

After smuggling the cooking gas, which largely falls below local quality standards, the illegal dealers skew the market by offering attractive rates, thereby attracting unsuspecting consumers.

Last week, a supermarket in Kawangware was found selling hundreds of rebranded cylinders belonging to various oil marketing companies in a raid that saw the owner of the store arrested and later released.

Energy and Petroleum Regulatory Authority Director General Pavel Oimeke, who has been blaming weaker regulations for the existence of LPG cartels, did not respond to our queries despite promising to do so through his communication team.

The new Petroleum (Liquefied Petroleum Gas) Regulations 2019 require LPG retailers to obtain multiple approvals to be able to stock different brands after the mandatory exchange pool which allowed for cross-filling of competitors’ cylinders was stopped.

EPRA has been warning dealers against stocking cylinder brands without licences and written consents from each brand owner and maintains that supermarkets, shops wholesalers and transporters will now be subjected to strict compliance requirements to tame the illegal practice that has exposed consumers to poor quality and risky cylinders in the past.

“Following increased public safety concerns on the use, distribution, retail and transportation of LPG cylinders, all retailers, wholesalers and transporters shall henceforth not undertake the business of handling cylinders of another brand owner without prior written consent from the brand owner and licence from the Authority for each business location and specific to the authorised cylinders only,” EPRA wrote in several public notices last month.

The regulations increased penalties for illegal gas refilling tenfold to a minimum of Sh10 million in a fresh drive to ensure safety and promote oil dealers.

The rules also provide for a similar fine for those discharging bulk gas in locations that lack regulatory approval while making it an offence to transport more than three gas cylinders in a car unless regulatory exemptions are issued.

This is meant to deal with those conducting illegal refilling of competitors’ cylinders and selling them at discounts of up to 25 per cent, being unencumbered by costs relating to cylinder manufacturing and branding.

Wholesalers who fail to keep gas cylinder records for more than a year also face a fine of Sh50,000 for each offence, with the records expected to include the serial number of each cylinder, date of purchase, weight of each cylinder and the name of the buyer.

In 2017, Nairobi businessman Isaac Irungu hit a snag in his Sh4.6 million compensation demand from National Oil Corporation of Kenya after a gas cylinder explosion left him with serious burns.

Nock disputed claims that its cylinder was faulty after the Supa Gas he bought in October 2016 exploded and burst into flames, causing him the injuries. In its defence, Nock blamed Isaac’s gas regulator for the fault, insisting on the quality of the gas.

Industry players blamed regulatory laxity, with Mr Oimeke indicating that the regulator had adopted a “negotiated compliance approach” to get to the bottom of the matter even as it struggled with enforcement.

EPRA had promised to hold discussions with operators of illegal sites and licence them to bring them under watch but the number of illegal dealers seems to have multiplied over time.

Last year, police impounded over 500 gas cylinders in a night raid at a residential house in Eastleigh. Another raid was conducted at Madaraka estate where more than 600 cylinders were found being refilled under risky conditions in a residential house.