Regulator on the spot for cosy treatment of illegal LPG firms

An illegal gas filling station. Many dealers have taken to residential estates to carry out their operations, endangering human lives. PHOTO | ROBERT NGUGI | NMG
An illegal gas filling station. Many dealers have taken to residential estates to carry out their operations, endangering human lives. PHOTO | ROBERT NGUGI | NMG 

The Energy Regulatory Commission is on the spot following re-emergence of illegal Liquefied Petroleum Gas dealers operating largely in residential areas.

Over the past two months, thousands of gas cylinders impounded by police in Nairobi have been handed back to the dealers through direct or direct intervention of the commission, a move that has sparked outcry from law enforcers.

The emboldened dealers have taken to residential estates to carry out their trade, endangering human lives, with the regulator saying they are “in discussions” with the rogue operators.

ERC acting Director General Pavel Oimeke said they have adopted a “negotiated compliance approach” to understand the root of the illegal business. This has given the dealers more muscle to run the trade without fear.

“In this approach, ERC decided to understand the root causes of illegal LPG operations by holding discussions with operators of illegal sites. By reaching out to the dealers, we have been able to licence an additional 19 LPG firms from an initial number of about 25 in 2014,” Mr Oimeke told the Business Daily in an email response.

Last month, police impounded more than 500 gas cylinders in a night raid at a residential house in Eastleigh after residents complained of continuous leaks.

Another raid was conducted at Madaraka Estate where more than 600 cylinders were found being refilled under risky conditions in a residential house. Residents who kept sensing leaked gas complained to a top police boss, leading to the raid and prosecution of the dealer.
In what has angered the policemen involved in the case, ERC wrote to have the case withdrawn under unclear circumstances.

Operators who did not want to be mentioned for fear of victimisation by the regulator also questioned the manner in which the free LPG operation licences were given. They claimed that this hampers proper crackdown on illegal dealers as they easily get licences.

Petroleum Institute of East Africa general manager Wanjiku Manyara said there were increased incidents of cylinder theft, with many illegal traders taking advantage of the shared nozzle that allows all cylinders to be exchanged across brands.

“We constantly follow up with the regulator on inspection and monitoring efforts, given that our members continue to experience adverse impact of illegal LPG operations.

Currently, great concern has been raised by members (three medium sized companies) on the escalated LPG cylinders in transit to consumer locations, with vehicles being highjacked from Makutano towards Mt Kenya region,” Ms Manyara said.

In another case involving a major operator called Multi-Energy Ltd, which holds licence ERC/LPG/1076 to trade in Nairobi, the regulator again withdrew a case in Kisumu after the firm took plea, only to licence the company in under one week.

Mr Oimeke did not deny or confirm the shadowy circumstances under which the firm acquired a second licence while the case was already midway. But he said the firm only applied for an amendment of their earlier licence.

“Multi Energy Ltd has been licensed for ‘storage, filling and wholesale’ of LPG in cylinders since September 2014. The company had only applied for an amendment of their licence in November 2016, which was granted as per provisions of Section 83 of the Energy Act 2006. Multi Energy is also a cylinder brand owner and a member of the LPG Cylinder Exchange Pool,” Mr Oimeke wrote in response to how the regulator handled the case.

On ERC’s website, the firm holds just one licence to operate in Nairobi.

The regulator defended the quick issuance of LPG licences as a way of facilitating “ease of doing business”. ERC said it takes a maximum 30 days to process an application for a licence.

It said 23 companies had so far been licensed to import LPG.  Only three new companies have been licensed since January 2017, according to the regulator.

The operators whose risky ways of running the business have raised safety concerns from residents as well as other consumers, are said to be multiplying after Kenya lifted restrictions on importation of LPG through Namanga border.

Kenya does not have a single gas testing facility. It is in the process of procuring two LPG testing facilities to be used at Namanga and Lunga Lunga border points, through which Kenya receives more than 2,000 tonnes of cooking gas per month, according to official data.

Petroleum Principal Secretary Andrew Kamau earlier told the Business Daily that the country only relies on the “goodwill” of traders to import the commodity and cannot guarantee the quality.

“We can only assume that the traders are law abiding and that Tanzania will ensure that we receive good quality LPG,” he said.

Incidents of gas leakage and cylinder explosions are common, but are largely unreported as illegal cartel suppress public outcry, including compensation and sweet deals for people residing near illegal plants.

Most explosions happen when LPG lacks ethyl mercaptan, a chemical that gives the commodity a strong smell to enable leakage detection. At least 26 illegal gas filling plants located in eight counties were identified by the regulator in 2015.

The cartels intertwine their trade with the legal supply chain, confusing consumers and undercutting genuine dealers.

The cartel hijacks trucks transporting LPG cylinders and takes them to illicit dens for filling before using their channels to release them into the market.