The LPG Agenda
For these reasons, in 2009, the government of Kenya passed into law the country’s first Liquefied Petroleum Gas (LPG) regulations to promote the use of LPG as a ‘clean fuel’ for domestic cooking.
This delivered a step-change in the number of Kenyan using LPG where consumption rose from 1kg to 2.5 kg per person per year but the country continued to lag behind countries, such as Senegal, Turkey and South Africa that had achieved a rate of 12 kg, 15kg and 6kg per person per year as LPG moved to become their primary cooking fuel.
Moreover, safety issues emerged due to illegal cylinder refills that caused leakages and explosions in the home, with three of Kenya’s largest insurance firms reporting that LPG-related incidents were driving domestic insurance claims.
The impact of the deterioration in safety, confused liability, and a misalignment of cylinder investment and brand ownership, led to declining investment in the Kenyan LPG industry by oil marketers.
As a result, the Government of Kenya drew up new Liquefied Petroleum Gas (LPG) regulations to seal all the loopholes created by the previous regulatory framework and to sustainably reform the segment. The Government policy goal is to achieve LPG consumption of 15 kg per person per year and increase safe cylinder investment from three million to 18 million cylinders in circulation.
PIEA is working in partnership with the government and LPG market participants to ensure the regulations are abided by; to stop malpractices, which have been killing Kenyans; and boost the levels of investment in the LPG industry.
On June 25th 2019, new LPG regulations were gazetted. This guide lays out:
the ways in which the new regulations differ from the previous regulatory regime,
- all elements regulators are now monitoring and enforcing,
- the obligations of the LPG marketers, and
- consumers’ rights.
Apart from the Energy and Petroleum Regulatory Authority (EPRA), the other regulators of the new LPG regulations include the Kenya Bureau of Standards (KEBS), Kenya Revenue Authority (KRA), Anti Counterfeit Agency (ACA), Directorate of Occupational Health and Safety (DOSH), National Environment Management Authority (NEMA), and the County Executive Committees (CEC’s) in public health, environment and energy across the country.
The LPG Regulations 2019 have been designed to deliver a robust legal and regulatory framework that creates confidence for both LPG investors and LPG consumers.
To this end, supply chain licensing has been structured to create effective and sufficient infrastructure that enables the timely importing and storage of the necessary quantities of LPG and an adequate quantity of safe LPG cylinders made accessible to consumers through a well-developed and documented distributor network.
The criteria created for licensing has, furthermore, been designed to address all previous loopholes and omissions that impeded a conducive business environment and guaranteed consumer safety, supported by enhanced penalties to secure those aims.
Participation in the LPG supply chain without a valid license will incur a penalty of Sh5m and three years’ imprisonment.
REQUIREMENTS- Transport of LPG in Bulk
- Scanned original copy of CR 12 from registrar of companies (not older than three months) for Limited Companies;
- Scanned original copy of valid tax compliance certificate from KRA;
- A valid certificate of calibration for the LPG tank mounted on each vehicle
- Fire certificate from the Chief Fire Officer
- A Valid report on examination for LPG tank mounted on each vehicle
- A valid Motor Vehicle Inspection Certificate for each prime mover and trailer
- Log books for each prime mover and trailer
- Valid Medical Surveillance certificate for Drivers from Designated Health Practitioners as per Occupational Health and Safety Act 2007 9. A valid driving license for each driver.
REQUIREMENTS- Storage and Filling of LPG in Bulk
- Scanned original copy of certificate of incorporation/business registration certificate
- Scanned original copy of CR 12 from registrar of companies (not older than three months) for Limited Companies;
- Scanned original copies of Identification documents (IDs or Passports) for all the directors, 4 scanned original copy of Single Business Permit from Respective County Government;
- Scanned original copy of valid tax compliance certificate from KRA; and
- Scanned original copy of PIN/VAT Certificate.
- Scanned original copy of Work permit/Entry Permit Class “H” for foreign directors
- Proof of ownership of the LPG filling facility
- Construction Permit from Energy Regulatory Commission
- Environmental Impact Assessment License from NEMA
- Certificate of compliance with the Physical Planning Act of 1999
- Fire certificate from the Chief Fire Officer 13. A valid copy of certificate of registration of work place from DOSHS 14. Proof of ownership of at least 5,000 cylinders of either 1,3,6 or 13kg/Written authority for filling from the LPG cylinder brand owners
- A valid copy of weighing scale calibration certificate from Weights and Measures Department
- Supply agreement/letter of intent from a licensed LPG importer
- Proof of compliance with the Kenya Standard (KEBS letter)
- A Valid report on examination for LPG tanks
- A valid certificate of calibration for the LPG tanks
- Scanned original copy of certificate of incorporation/business registration certificate
- Scanned original copy of CR 12 from registrar of companies (not older than three months) for Limited Companies;
- Scanned original copies of Identification documents (IDs or Passports) for all the directors; 4. Scanned original copy of Single Business Permit from Respective County Government;
- Scanned original copy of valid tax compliance certificate from KRA; and
- Scanned original copy of PIN/VAT Certificate.
- Scanned original copy of Work permit/Entry Permit Class “H” for foreign directors
- Scanned copy of distributorship agreement from LPG Cylinder brand owner
- Weighing scale calibration certificate from Weights and Measures department
- Scanned original copy of certificate of incorporation/business registration certificate
- Scanned original copy of CR 12 from registrar of companies (not older than three months) for Limited Companies;
- Scanned original copies of Identification documents (IDs or Passports) for all the directors; 4. Scanned original copy of Single Business Permit from County Government;
- Scanned original copy of valid tax compliance certificate from KRA;
- Scanned original copy of PIN/VAT Certificate. ‘
- Scanned original copy of Work permit/Entry Permit Class “H” for foreign directors
- Valid hospitality with a licensed LPG Storage facility at Mombasa.
The penalties and fines shall be determined by the Energy and Petroleum Regulatory Authority, and be recoverable summarily as a civil debt. Any person who is dissatisfied with a decision of the EPRA under these regulations may appeal to the Energy and Petroleum Tribunal. Where any default in or contravention of any of the provisions of the regulations is made for which no fine or penalty is expressly stated, the person defaulting or contravening shall on conviction be liable to a fine of not less than Sh100,000.
For illegally refilling cylinders, the penalty will be Sh10m and three to five years imprisonment.
The new LPG regulations have placed new obligations onto oil marketers:
To ensure all cylinders have standard identification features
- Cylinder brand
- Serial number of each cylinder
- Manufacturing date – the cylinder should be revalidated every eight years
- Net weight in KG of the cylinder
Regulation Primer
Changes in the new regulation
Consumers can now only purchase a refilled LPG cylinder of the same brand as the empty one that they present at the retail outlets. Before, consumers could interchange empty cylinders of one brand with any available brand of the same size at the retail outlets.
Only the brand owners are allowed to handle and refill their gas cylinders. Previously, the competitors could handle other brand owners’ cylinders which was exploited by unscrupulous business people who would illegally refill cylinders that didn’t belong to them and there was no traceability or accountability of cylinders that were in the wrong hands. The previous system saw brands lose track of 90 per cent of their cylinders, stalling investment in further cylinders, and seeing legal checks set aside as nameless refillers resold cylinders but could not be made accountable for safety breaches.
Cylinders began to develop faults that were not picked up because they were not undergoing the required safety checks. This saw the beginning of cylinders leaking, exploding, and causing awful harm to people’s homes and lives. These safety procedures are now mandatory.
2. Licensing is mandatory
All participants in the LPG industry must now be licensed by the Energy and Petroleum Regulatory Authority (EPRA). This includes importers, exporters, manufacturers, wholesalers, distributors and retailers. Previously, this requirement was not fully enforced, which led to illegal trading, illegal rebranding, illegal refilling and counterfeiting of gas cylinders.
3.LPG brand owners are responsible for the safety of every cylinder
LPG brands are now responsible for guaranteeing the safety of every cylinder. The brands, which will only swap their cylinders through their own retail sites and/or authorized retail points, must also now add safety instructions onto each cylinder, including guides on what to do if consumers smell a gas leak.
4. Gas cylinders are owned solely by the brand owners
LPG brands are now responsible for guaranteeing the safety of every cylinder. The brands, which will only swap their cylinders for new ones through their own branded retail points, must also now add safety instructions onto each cylinder, including guides on what to do if consumers smell a gas leak.
5. The mandatory exchange pool is abolished
The regulations have abolished an exchange pool created in 2009 that enabled consumers to interchange their empty gas cylinders for filled ones of any brand of the same size. This system was aimed at enhancing access and convenience to Liquefied Petroleum Gas (LPG), but had the unintended consequence of increasing illicit and counterfeit trade.
The exchange pool has now been replaced by the Mutual Cylinder Exchange System which applies where two or more brand owners agree to interchange their cylinders and obtain approval first from Competition Authority of Kenya’s and then EPRA to ensure that there is no market failure of any form.
6. Consumers are entitled to the refund of their deposit on returning a cylinder
An LPG consumer who returns a cylinder to a brand owner is entitled to a refund of the cylinder deposit. Previously, this was not the case as it wasn’t clear if the consumer was buying or putting a deposit for a new cylinder and their righto access the deposit wasn’t clear either.
Marketer's obligations
of license | New application | Renewal application |
Import of bulk LPG | Sh20,000 | Sh10,000 |
Export of bulk LPG | Sh8,000 | Sh5,000 |
Transport of bulk LPG | Sh10,000 | Sh5,000 |
Storage of bulk LPG | Sh20,000 | Sh10,000 |
Filling of LPG into cylinders | Sh20,000 | Sh10,000 |
Export of LPG into cylinders | Sh10,000 | Sh5,000 |
Wholesale of LPG in cylinders | Sh8,000 | Sh5,000 |
Retail of LPG in cylinders | Sh5,000 | Sh2,000 |
Fines and penalties for failure to adhere to the regulations
Offence | Penalty/fine in Kenya shillings |
Operation of LPG business without a valid license | 500,000 |
Non-declaration of the load point for the imported bulk LPG and the quantity imported | 25 per cent of the customs value of the bulk LPG |
Falsified declaration of quantities of imported bulk LPG | 25 per cent of the customs value of the bulk LPG |
Non-declaration of the final destination of imported bulk LPG | 25 per cent of the customs value of the bulk LPG |
Non—submission of bulk LPG import data on a monthly basis | 100,000 |
Non—submission of cylinders import data on a monthly basis | 100,000 |
Supply of Bulk LPG to facilities not licensed under these regulations other than LPG consumer facilities. | 500,000 |
Unauthorized refilling of cylinders | 20,000 for each filled cylinder |
Stocking or offering for sale cylinders that don’t meet Kenya Standards | 20,000 for each non-confirming cylinder |
Failure by LPG licensee to comply with the obligations set forth in these regulations. | 100,000 |
Obstruction of inspection officers from the Commission or its Agents | 100,000 for each day the obstruction occurs |
Failure to report an LPG related accident within the prescribed 48 hour period | 100,000 |
- Declare number of competitors’ cylinders in their possession within one month
- Collect their empty cylinders from competitors within two months – uncollected cylinders after six months of regulation enforcement, can be rebranded by the holder upon meeting the legally prescribed requirements
- Within two months declare to the EPRA the points where consumers can return their empty cylinders.
- To meet the annual increment cylinder target of 5,000 additional cylinders a year up to 20,000 cylinders
- Submit a completed online application form, available from EPRA website, with scanned original copies of:
- Business registration certificate/ certificate of incorporation
- Up to one-year-old CR12: obtained from the registrar of companies to show details of the company shareholders
- National IDs or passport of company directors
- Valid single business permit from the county government
- KRA PIN certificate
- Valid tax compliance certificate
- Work permit class “G” for foreign directors working in Kenya
- Trade Mark registration certificate obtained from the Kenya Industrial Property Institute (KIPI) kipi.go.ke
- Valid Weighing Scale Calibration Certificate obtained from the Department of Weights and Measures
- Certificate of Conformity of the Cylinders to the Kenya Standard
- Proof of ownership of a minimum of 5,000 standard capacity cylinders
- Inventory for each cylinder, giving serial number, capacity, and landed or ex-factory cost inclusive of all taxes
- Valid insurance cover against injuries to LPG consumers and third parties relating to faulty cylinders
- Copy of applicant’s Customer Complaint Handling Procedures LN NO.49 of 2012 obtained from EPRA.
- To declare LPG import quantities, load port and destination within 24 hours
- The cause of the accident
- The effects of the accident
- The proposed remedial measures and timeline
- To obtain a valid license from EPRA to import, complete an online application available on the EPRA website and submit with scanned original copies of:
- Business registration certificate/ certificate of incorporation
- Up to one-year-old CR12: from the registrar of companies giving details of the company shareholders
- National IDs or passport of company directors
- Valid single business permit from the county government
- KRA PIN certificate
- Valid tax compliance certificate
- Work permit class “G” for foreign directors working in Kenya
- Proof of access to a licensed storage facility for importers, obtained through ownership of a long-term lease of 5 years minimum
- Proof of presence in the market for importers through the ability to supply at least 2,000 metric tonnes a year, and through the ownership of a cylinder brand
- Proof of access to supply LPG by either being a holder of a bulk LPG import license, or a supply agreement with a holder of a valid bulk LPG import license.
- Documents 1-8 (outlined in the business operating license above) then add valid scanned original copies of:
- Valid certificate of calibration for the Bulk LPG tank mounted on each Bulk LPG transport vehicle obtained from the Department of Weights and Measures
- Report on Examination for the LPG tank mounted on each transport vehicle
- A comprehensive emergency preparedness and response plan
- Certificate of Conformity to the Kenya Standard for each Bulk LPG transport vehicle
- Fire certificate from the county for each transport vehicle
- Motor Vehicle Inspection certificate for each transport vehicle issued by NTSA
- Proof of fitting the vehicle with a working GPS-enabled tracking system
- Logbook for each Bulk LPG transport vehicle, in the name of the applicant, or a valid lease agreement with the Bulk LPG transport vehicle owner
- Medical Report for each driver from a Designated Health Practitioner as per Occupational Health and Safety Act 2007;
- Driving license for each driver;
- Proof of attendance of a defensive driving course for each driver from the Commission
- List of transport vehicles to be used plus the Tanker Permit for each vehicle as issued by the Commission
- Maintain a list of all cylinder return points.
- Submit to EPRA upon request to publish them on its website
- To refund customers’ deposit on return of the brand’s cylinder
- Within one month, declare new cylinder stock numbers and manufacturers to EPRA
- Maintain and declare to EPRA stock details of all cylinders purchased and sold, being:
- Standard identification features
- Name of business entity from which the cylinders were purchased
- Date of purchase of each cylinder
- Name of retailer to which the cylinders were sold
- Date of resale of each cylinder
- Ensure that the standard refilling process is adhered to as they are the sole owners of the cylinders and if there is an accident, the LPG brand owner bears the responsibility.
- Ensure that the standard refilling process is adhered to as they are the sole owners of the cylinders and if there is an accident, the LPG brand owner bears the responsibility.
- To maintain a list of their authorised filling agents, wholesalers, and retailers