Oil & Gas

[Column] The law is only as good as the regulator: as LN100 has shown Kenya

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At the end of every regulatory process comes the regulator, the implementation and the enforcement. For without them, as we know only too well in Kenya, every law is no law at all, with the beginning, middle and end of legislation coming only on its application.

A case in point is Legal Notice, LN for the initiated, 100, gazetted on the 25th June, 2019, with immediate effect.

LN 100 governs the LPG industry and put an end to the mandatory interchange of one brand of gas cylinder for another as part of a vigorous move to end the illicit trade in LPG including the illegal refilling, rebranding, reselling, storage, and transporting of LPG.

The former LN 120 was made with good intentions. However, while the interchangeability of cylinders seemed a good idea in improving consumers’ convenience in accessing cooking gas, it got exploited by ruthless thieves, who used other brands’ cylinders to hold their own gas, filling them most often without licenses, safety checks, or any regulatory oversight.

Wanjiku Manyara, General Manager, Petroleum Institute of East Africa.

The illegal cylinders would return to market and often leak thereby exploding, since the required rigorous safety checks had not been done. Indeed, many were filled illegally for years on end. The licensed brands stopped investing in new cylinders for the thieves to seize for their own businesses. As a result, Kenyans use far less LPG than other African nations and have more cooking smoke in the home leading to higher infant mortality and putting respiratory diseases onto the nation’s list of top killers.

It has been a dynamic that has hurt a lot of people, which is why the government moved, and regulated. It ended the interchanging and made every value chain player accountable by law.

But the regulator did not and has not demonstrated many matters of ideal regulation because of its commissions and omissions on LN100.

The first challenge in implementing LN100 was the absence of correct information or guidance from the regulator. Indeed, the media even began to report that the new regulation would not be coming into effect until the end of 2019, whereas it was already in effect from the day of gazettement. This resulted in major confusion – The question on everyone’s lips became was the law in force or not?

But it was a confusion that highlighted the vital and necessary role of all regulators, as a first base and starting point, of clarity around what the law is and what law is in force.

However, with the confusion sown and supported by the regulator, a well-considered and thought-through transition period in one aspect of the new regulation – being the gathering of cylinders ‘out there’ – was abandoned, and nothing at all moved or changed for the rest of 2019 in the illegal refilling of LPG cylinders.

In that extra time of non-implementation, just as a small mention, more than 10,000 more Kenyans died from respiratory diseases caused primarily by using smoking cooking fuels, like charcoal and firewood, and the LPG brands held off investing in new cylinders as the illegality continued.

In fact, the secondary enforcement agencies suspended the move to stop the illegal filling of cylinders. From 25th June 2019, no retailer was allowed to sell any brand other than the one he had an agreement with – confirmed by a letter of appointment as a brand retailer, and the police began enforcement on this

However, the regulator then issued an unnecessary letter appearing to instruct the police to desist from enforcement.

And here lies a second vital lesson on the implementation of new laws. Many new rules involve multiple authorities in enforcement. The sectoral regulator does not have the powers to annul the law or reverse it, but only to implement it, and they also need to communicate clearly with the other enforcement agencies.

However, with 2019 passed and implementation apparently fudged until 2020 without approval or executive intent, this year the regulator announced a further three-month extension to the implementation on the claim that only 20 per cent of retailers licenses had been processed.

Licensing was never a precondition for the ending of illegal refilling and of interchangeability. The LPG licensing was given a transition period; ending interchanging and illegal refilling was not.

Thus, another lesson: the regulator needs to read the regulation and what it states on transition to ensure its application.

The muddled implementation of LN100 has also shown that if communication is confused and enforcement is repeatedly postponed, the majority of retailers will not even apply for a license by the (initially unpublicised) deadline.

In fact, a factor in all the delays has been the deceptive rant by an association that represents those who built their livelihoods on the old system. Yet, with any new law there will be change and those who previously profited will resist.

LN100 has shown us the importance of a regulator who is robust in holding to both the letter and spirit of the law. It is not appropriate to conclude the entire legislative process with an effective and repeated deferment or annulment, be it for one period or another period: the regulator does not exist to change the law. The regulator exists to apply the law.

It’s a vital distinction, for our legislators sit in parliament and government. They do not sit in our regulating bodies, which are appointed to apply the law that is gazetted and to do so in ways that we can all trust in seeing the law that is created to protect Kenyans applied as stated.

This column was submitted by Wanjiku Manyara, General Manager, Petroleum Institute of East Africa. Featured photo credits/NMG

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