The alcoholic beverage sector has asked Parliament to nullify a set of new regulations that, if implemented, they claim could increase the cost of production by 70 per cent.
The Alcoholic Beverages Association of Kenya (Abak) yesterday said the Sustainable Waste Management (Extended Producers Responsibility) Regulations 2024 would end up causing more harm and derail progress made in sustainable waste management.
The regulations, which are expected to be administered by the National Environment Management Authority (Nema), impose a Sh100,000 operating licence fee, which Abak wants to be slashed to Sh10,000.
The regulations, which are undergoing scrutiny by the National Assembly’s Committee on Delegated Legislation, seek to impose charges on materials used in packaging manufactured products.
The goal is to have manufacturers take responsibility for the environment in a bid to green the sector and make firms responsible for post-consumer waste management.
However, Abak contends that the Ministry of Environment, Climate Change and Forestry has overreached.
“While we support all efforts to promote sustainable waste management, we are afraid that the EPR regulations are more likely to impose an unnecessary and heavy financial burden on the manufacturing sector,” said Abak chairperson Eric Githua at a press briefing in Nairobi.
Githua said the regulations carry the risk of making businesses untenable as they would increase the cost of making goods and drive it so high that the goods would be unaffordable to make and sell to consumers.
The regulations seek to introduce multiple fees, such as Sh150 per item on all imported packaging materials and finished goods, five per cent fees which will be withheld by Nema from registered producer responsibility organisations (PROs), an annual operating license of Sh100,000 and a registration fee for producers and PROs.
Githua said with the Sh150 per item fees on imported packaging material in addition to the fees paid to PROs for post-consumer waste collection and management, that would amount to double taxation.
"This is because manufacturers would in effect pay PROs a fee to manage post-consumer waste on the same item for which they paid Sh150 at the point of importation," he said.
The fee imposed per item is also ambiguous as it does not expressly state what constitutes of an item, he added.
“At a fee of Sh150 per item, and with the broad categories of goods used in manufacturing that are targeted, the cost of production in the alcoholic beverages industry is going to increase by 70 per cent."
Abak secretary Eric Kiniti said manufacturers and distributors of alcohol are also concerned about how the new regulations were developed as there was inadequate public participation.
“The lack of public participation in the formulation of regulations whose implementation could lead to a 70 per cent increase in the costs of production for the alcoholic beverages sector is a fatal sin of omission,” he said.
The draft that was published and is now before the Committee on Delegated Legislation included provisions that had not been discussed, Kiniti said.
"These include fees charged per item, which is ambiguous and open to abuse, double taxation due to the payment for waste management on importation and at post-consumer waste level, and a 10-fold increase of the registration fees."
Abak has asked the parliamentary committee to annul the regulations and ask the Ministry of Environment to conduct an impact assessment of the new charges and involve all stakeholders in the development of regulations that would promote manufacturing.
“A great deal of investment in infrastructure and consumer sensitisation is required to achieve 100 per cent sustainable waste management," Githua said.
"This can only be achieved over time and through strong collaboration between government and all stakeholders within the manufacturing ecosystem."
