Attempts to shut down nine gas filling plants challenged

Kenya: Middle tier and small companies marketing cooking gas in Kenya have claimed unfair treatment from government. The firms accuse State officials of favouring multinationals. They say plans by government agencies manning the petroleum industry to shut down nine gas refilling plants citing national security are discriminatory.

The companies whose plants are earmarked for demolition now claim that they are not getting an even playing field and see the hand of oil majors in Kenya, who they say are now trying to get rid of them and expand their control of the petroleum and gas market in Kenya.

The Energy Ministry has trashed the claims and said the nine companies have been operating illegally as none of them has a licence to run a gas refilling plant. The companies have since moved to court in a bid to protect their share of the lucrative Liquefied Petroleum Gas (LPG) market in Kenya. The nine firms said they stand to lose over Sh45 million each for the investment already made in setting up plants within Nairobi and hundreds of millions more in lost opportunities.

“The intended demolition shall amount to unfair play and discrimination since there is no equal treatment between multinationals and small operators in the thriving LPG business,” said Zein Salimin, a director at Gee Gas Limited, in an affidavit filed in court. The companies succeeded in getting a court injunction stopping the ministry from demolishing their plants, with the case slated for hearing on July 31.

High Court Judge Isaac Lenaola issued conservatory orders restraining the Petroleum Institute of East Africa, the Inspector General of police, the County government of Nairobi, Energy Regulation Commission and the Cabinet Secretary, ministry of Energy and Petroleum from demolishing the filling plants. PIEA is the lobby for major oil marketing companies that also sells LPG in the country. Joseph Njoroge, the PS ministry of Energy, disputed the claims and said the companies had been operating the plants illegally.

“The plants cannot be demolished if they are being operated legally. Whoever was planning to demolish them was doing what they are supposed to do, which is to ensure the safety of Kenyans using the gas products,” he said Friday in an interview. “We are not in any way trying to frustrate anybody’s business... gas is dangerous and if not handled with care, it exposes Kenyans to dangers. If they are claiming legitimacy, they should show you their licences.”

Fair competition

In the papers filed in court, the companies admit that not all of them have licences but they have been working with ERC and they are fully compliant with safety, environmental and other requirements by ERC. The gas companies include Gee Gas limited, City Gas limited, Avian gas Limited, Gazlin Energy Limited and Swift Energy Distributors Limited. The others are Triple Gas Limited, Consumer gas Kenya limited, Eco Energy East Africa Limited and Motor Gas Company Limited. The firms have also sued the CS Ministry of Interior, and coordination of national government and the Attorney General. In their case, the firms through lawyers Jacob Okoth and Thomas Kuria said that they are in the procress of registering and complying with the lengthy process. Lawyer Okoth told the judge that his clients may suffer a loss of huge sums of money in investments and consequently face execution orders from their financiers who had funded their projects.

“The applicants have begun the process of complying with the requisite laws to enable them to carry on the business of retailing liquefied petroleum,” said Lawyer Kuria. The high court heard that the owners of the companies have not been served with any notice with effect of the impending destruction of their premises and property. The petitioners; Zein Salimin, George Wakaro, Mohamed Salah, Ahmed Hassan, Hiliule Mohamed Bare, John Mark Mwangi, Ahmednoor Mohamed, Mohamed Dahir Salat, Gideon Njoroge and Patrick Kamau, have also sworn affidavits.

They said the government was acting in a discriminatory manner contrary to the principles of democracy and rule of law. “The core mandate of establishing the petitioner companies is to engage in the business of distributing liquefied petroleum gas at competitive rates and at affordable prices while in fair competition with well-established multinational companies engaged in the same trade,” said the petitioners in a joint affidavit.

They said the firms had taken loans from banks to facilitate  the construction of filling plants to the standards required by the Energy Regulatory Commission and the affiliate licensing bodies.