Fuel, power costs likely to rise as regulator roots for new laws

Energy and Petroleum Regulatory Authority acting Director General Daniel Kiptoo addressing press in Nakuru (PHOTO: Kennedy Gachuhi)

Industry regulator, the Energy and Petroleum Regulatory Authority (Epra) has embarked on public and stakeholders consultations on 11 new draft petroleum regulations before their approval.

This comes barely three months after the State agency announced new regulations on the solar energy sub-sector that sparked outrage among Kenyans who were shifting from grid power over its huge costs and reliability.

The new petroleum regulations will operationalise The Petroleum Act of 2019. The various sets of regulations will affect how players in the midstream and downstream sub-sectors will operate.

The new guidelines include a review of the fuel pricing formula in which they have factored in new components that might see pump prices go up.

The regulations have also reviewed the minimum operating stocks that oil marketing companies are required to maintain as well as a different approach to operating the strategic petroleum reserves.

They also set the rules within which tankers moving petroleum products will be required to abide.

Epra acting Director-General Daniel Kiptoo over the weekend led the agency in collecting views from the stakeholders in Nakuru County, an exercise he said will continue across all major towns.

“The new regulations will address inadequacies in the existing laws. The result will be increased penalties for offences and increase the Epra’s power to demolish illegal facilities and approve contracts for common user facilities,” said Kiptoo.

He noted that the draft regulations will provide a legal framework for the authority to streamline the importation of petroleum products, business licensing and construction of petroleum facilities.

“They will give us the power to effectively regulate road transport of petroleum products, construction of retail stations and pricing of petroleum products to protect both investors and Kenyan consumers against malpractices in the sub-sector,” Kiptoo observed

He said the regulations will help improve petroleum supply and distribution logistics in the country while ensuring only prudently incurred costs are passed onto consumers.

“There will be improved security of supply of petroleum products and enhanced supply and distribution logistics even in instances when we experience disruptions in the supply chain,” he said.

He averred that under the new legal frameworks, consumers will be assured of a supply of quality petroleum products under the set standards of environment, health and safety. Epra had in December last year come under heavy criticism following publication of draft regulations to govern solar power.

The regulations had placed higher demands on technicians installing large solar power systems, then seen by segments of the public as a tactic to slow down the growth of the industry, which is proving a formidable competitor to the country’s grid power with the potential to erode earnings for Kenya Power.

Kiptoo defended the regulator’s move to tighten rules on the use of solar energy amid rising concerns from consumers, noting that they are aimed at protecting both players and consumers in the industry.