Why Energy Regulatory Commission should stop taking Kenyans for a ride

Kenya needs to regularly audit its various regulatory commissions to ensure they do not, proverbially, run with the sheep but hunt with the hounds.

The goings-on at the Energy Regulatory Commission (ERC) are particularly puzzling and should be investigated to determine whether the taxpayer is getting value for money.

The reasons the commission regularly trots out to justify its failure to reduce the petroleum pump prices in tandem with the drop in international crude oil prices are increasingly wearing thin. To most analysts — and ordinary Kenyans — it appears the commission moves faster to increase prices than to reduce them.

The statistics given to support the measly price reductions seem only applicable when it is time to give the consumer—and by extension all Kenyans are consumers of petroleum products—a much deserved relief. When the time comes to raise prices, however, ERC moves with astonishing speed.

Irrespective of what ERC says, it does not seem right that the pump price Kenyans are paying today, when the crude oil price was last week quoted at around Sh5,300 is at the same level as what they paid in March, 2011, when the crude oil prices were quoted at Sh9,600 ($114). Be that as it may.

Rocket science

Nevertheless, Kenyans have reason to celebrate the belated lower oil prices if only because they relieve pressure on the local currency as less money is needed to import the same quantity. But that is not all. Together with the marginally reduced petroleum prices, the other silver lining on this cloud which is already adversely affecting Kenya’s hopes of joining the club of oil producing and exporting nations is that it gives the country’s leadership another chance to rethink and fine-tune the policies guiding the sector.

The discovery of oil deposits in Turkana, Garissa and Lamu counties, for example, seemed to have caught the Ministry of Energy and Petroleum flat-footed. To its credit, despite its top leadership being new to the job they seem to be scrambling pretty well to handle the emerging challenges. Obviously, the fact that they are dealing with multinationals who have perfected the art of getting the better of countries and communities where they find the oil that gives them super-normal-profits does not make their work any easier. Yes, the ministry officials deserve Kenyans’ support as they up their game.

As part of upping their game, the Energy and Petroleum Ministry should ensure the contents of the bill it is working on—or is it already an Act?-- are well understood by a cross-section of Kenyans particularly those living where oil discoveries have been made. If it is necessary to outsource community outreach educational programmes, so be it. Obviously, the local leadership in these areas, starting with the governors moving down to members of parliament and MCAs should also be brought into the loop. All the national and local leaders should view it as their duty to get their people to trim their expectations and see the expected oil revenues as investment capital and not as resources to fund their consumption. All the players in the sector should also avoid exaggerating the amount of money to expect because this is where problems begin.

Despite lowered expectations of less oil revenues, the country and the local communities can still reap maximum benefits provided the oil curse can be avoided. And there is no reason why it cannot. Neither does it require rocket science. A first step towards this end is to continue the process of diversifying the country’s economy. President Uhuru Kenyatta’s recent directive to all government ministries and State corporations to stop importing goods which can be produced locally will be a much-needed boost to the local industry provided it is enforced. The president’s announcement that he expects to get a report of how well the ministries and State corporations have complied with the directive during the next presidential meeting is a welcome demonstration that he means business. Let it be hoped that the cabinet secretaries—whose mandates have recently been expanded to include overseeing the procurement process in the ministries they head—will not let the president, and the country, down.

Illicit goods

Let it be hoped, too, that the government law enforcement agencies, including the police and the judiciary, will also stand up to be counted in the war against counterfeits and importation of illicit goods. This would swell the country’s public coffers with billions of shillings that are regularly lost to counterfeiters and illicit goods importers who have turned tax evasion into a well-honed art. The law needs to teach them a lesson by treating them not as petty criminals but as enemies of the State.

This should be particularly the case when it is considered that the profits made trading in counterfeit and illicit goods is what fuels terrorism. And the country has already suffered more than its fair share of deaths and destruction from the nefarious activities of this particular enemy. The law—which is supposed to be blind (at its best)—should also go after the people aiding and abetting the counterfeit and illicit goods traders irrespective of which department of government they are hiding.

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