Gas exchange pool system to go under proposed rules

The fight against illegal LPG dealers is expected to growth sharper teeth when new regulations come into place.

Culprits will face huge penalties of upto Sh500,000 under the proposals on handling and storage of gas cylinders governing the market by the State.

Kenya will also disband the current system where oil marketers accept cylinders from rival brands during refills on a backlog of transfer payment.

This is aimed at boosting safety of consumers and weeding out rogue dealers according to Petroleum principal secretary Andrew Kamau.

The gas cylinder exchange pool took effect in 2009 and enabled consumers to refill gas at any of the dealers’ stations.

But under the proposed rules, release of bulk LPG to facilities not licensed under the regulations will see dealers attract a penalty of Sh500,000.

Twenty three companies are licensed to import LPG according to ERC as at last August.

Unauthorised refilling will see culprits pay a fine of Sh20,000 for each filled cylinder.

Illegal possession of LPG seals without the cylinder brand owner's authority will see those caught fork out Sh20,000 for each seal.

Failure by cylinder distributors to maintain mandatory records prescribed in the regulations will see culprits pay a Sh50,000 fine.

Obstruction of inspection officers from ERC or its agents will see offenders pay Sh100,000 each day this occurs while failure to report an LPG-related accident within the prescribed 48 hour period will see offenders pay a fine of Sh100,000.

“The rules are aimed at weeding out the illegal dealers and protecting consumers,” Mr Kamau told Smart Company last week.

Failure by operators to comply with the obligations set forth in the regulations will see players pay a fine of Sh100,000.

LPG dealers’ sometimes risky ways of running the business have raised safety concerns from residents as well as consumers.

Mr Kamau, however, maintained the new rules would not impact on the cost of the cylinders to consumers.

Operators could pass on the new license costs to consumers, it is feared.

“There will be no price hikes,” said Mr Kamau.

To import LPG in bulk players will now be required to pay Sh20,000 for a license while filling of LPG into cylinders will see players part with a similar amount.

The exchange pool system planned for scrapping requires oil marketers to accept their rivals’ empty cylinders when a customer wants to refill, making it convenient for buyers.

“Once these regulations come into force, the existing LPG cylinder exchange pool (the pool) shall be dissolved in accordance with Clause 24 of the LPG Cylinder Exchange Pool Agreement signed by all the members,” says the regulations.

In the pool system, players are, obligated to pay a fee to their rival towards covering deposit fee for the gas cylinder the customers exchanged during refilling at the competitor’s station.

But it has for long been feared that some oil marketers, especially small ones, take long to repay their rivals the deposit fees, creating a backlog of about Sh500 million that the dealers owe each other.

At, the same time, authorities plan to heighten the crackdown on illegal Liquefied Petroleum Gas (LPG) dealers amid mounting concerns over the rise in dirty players operating largely in residential areas.

The emboldened dealers carry out their trade, endangering lives and property even the Energy Regulatory Commission (ERC) promises to rein in the rogue outfits.

“The commission will continue to intensify countrywide surveillance in the LPG sector,” said ERC director-general Pavel Oimeke.

The agency has been conducting raids against unlicensed LPG dealers in collaboration with the Directorate of Criminal Investigations (DCI) and the General Service Unit (GSU).

In in latest safety alert, ERC has warned of illegal firms who import and sell LPG that does not meet local standards as well as of rogue operators who deal in unlicensed LPG storage and filing plants.

It has also cited unlicensed dealers who fill cylinders without the authority of the brand owner.

“Members of the public are urged to remain vigilant and to immediately report any suspected instances of malpractice in the petroleum sector to the commission,” the regulator appealed.

ERC has provided mobile numbers 0708444000 and 0709336000 through which Kenyans can report suspicious dealers.

A recent raid at an unlicensed LPG plant in Webuye, Bungoma County saw 12 suspects arrested and assorted LPG cylinders seized.

“The suspects will be arraigned in court and charged,” said ERC.