Why Cofek is asking Parliament to reject EPRA’s 11 petroleum regulation

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Energy and Petroleum Regulatory Authority (EPRA) has published 11 regulations on Petroleum. They range from business licensing, facility construction permit, reserves to pricing. Kenyans have up to March 1, 2021 to give comments.

COFEK finds the publication of the too many regulations, on one subject matter, at once as one deliberately designed to confuse the public and pass regulations with far-reaching implications.

Accordingly, COFEK has already requested the National Assembly Committee on Delegated Legislation to block enactment of the proposed regulations on account of this challenge and other issues as enumerated here below.

Based on our preliminary review, and views collected from other stakeholders, we oppose all the regulations on account that;

  • They are prepared by the industry and or the industry in mind and as such they are anti-public interest.
  • Requiring all dealers to obtain a petroleum facility permit before construction, for instance, means that only major dealers, possibly in major towns will be able to comply. This would be discriminatory against the hundreds of small petroleum dealers and further make it difficult for people to access fuel in remote and other areas not served or preferred by entrepreneurs able to comply with EPRA permit requirements. EPRA only needs to only type-approve designs and require minimum compliance at the time of construction.
  • All regulations place sweeping and vast discretionary powers to suspension and or annulling permits and licenses making them vulnerable to attracting corruption for compliance purposes
  • All regulations enhance the cost of doing business. Requirement of feasibility studies commissioned by registered professionals, for instance, goes to confirm our fears that the process is too expensive and reserved for high-end firms and essentially ring-fence the industry from small fuel dealers who fill huge gaps that can’t be filled by major Oil Marketing Companies (OMC’s).
  • In one aspect, the regulations are so intrusive as to require financing details to be shared with EPRA, prior to approval without observing the applicant’s privacy?
  • Duration of construction and facility licenses too short. They need to be doubled before provision of amendments
  • Ground for making suspensions and or revocation of permits/licenses made easier as opposed to applying only in extreme circumstances of say repeat offences. EPRA decision should not be ‘final’ and should allow an appeal before lodging an appeal at the Energy Tribunal.
  • Engaging only contractors who are licensed by the National Construction Authority (NCA) for that class of work makes it rigid and expensive. A provision for equivalent to NCA and or deletion of such a requirement should be left to NCA
  • The fees and penalties under the regulations are too prohibitive and are bound to favour the elite and run counter to the provision of Article 27(8) on non-discrimination
  • Red-tape and protocol on application of licenses and permits excessive
  • The regulations assume that the County Governments have no role in the devolved function
  • On pricing of petroleum, the regulations have introduced many other retail pricing heads and offered discretion to EPRA to vary the OMC’s margins from time to time. There is no limit. The EPRA formula is unsustainable as it works against the market forces of supply and demand and prescribes transport, storage, losses and profits for the retailers. This is wrong and should be done away.
  • Finally, we are asking Competition Authority of Kenya to audit the regulations and make a finding that the regulations offend Articles 27(8) and 46(1)(d) of the Constitution as read together with the Consumer Protection Act, 2012 and the Competition Act, Cap 504.
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