Illegal cooking gas dealers cost oil marketers billions

An illegal cooking gas filling business at residential plot in Toll, Juja on March 9, 2016.

Photo credit: File | Nation Media Group

What you need to know:

  • Rubis Energie Kenya, which recently acquired KenolKobil and Gulf Energy to push its Kenyan market share to 21 per cent, said it loses between Sh540 million to Sh1.1 billion annually.
  • However, illegal dealers in Industrial Area and Embakasi, Nairobi, and other towns still break the law despite the Energy and Petroleum Regulatory Authority crackdowns

Oil companies are raking in losses amounting to billions of shillings annually as unregulated gas filling stations continue to pop up across the country.

Rubis Energie Kenya, which recently acquired KenolKobil and Gulf Energy to push its Kenyan market share to 21 per cent, said it loses between Sh540 million to Sh1.1 billion annually.

The firm bought two million cylinders at average cost Sh2,700 and expected to get them back for refilling and quality checks after two or three months.

However, the company says, unscrupulous dealers hoarded most of the cylinders. The company now waits for up to two years to get back cylinders from the market.

Illegal dealers

“We are losing over $5 million (Sh540 million) on the lower side annually to illegal gas dealers despite it being a heavy investment on our part.

“We are since having to reduce investing in the cylinders due to the harsh environment,” Rubis Energie Kenya managing director Jean-Christian Bergeron told the Daily Nation.

Mr Bergeron said Kenya has one of the best policies and regulations against illegal liquefied petroleum gas (LPG) refilling but falls short in enforcement.

He said consumer safety is crucial in the use of LPG and that unregulated refillers risk the lives of users.

Drop in revenue

Section 13 (1) of the Petroleum (Liquefied Petroleum Gas) Regulations, 2019 states that it is illegal for one to refill LPG into cylinders unless one is the brand owner or has prior written consent from the brand owner.

BOC Gases said the loss of its cylinders to illegal dealers contributed to 10.6 per cent drop in its revenue between January and June as well as the effects of the Covid-19 pandemic and reduced supplies.

“This decline has primarily been as a result of government Covid-19 containment measures and their corresponding impact on the economy, especially in the months of April 2020 to June 2020,” BOC said in its half-year results statement.

Section 14 further prohibits refilling of a cylinder that is not branded, defaced or due for repair. However, illegal dealers in Industrial Area and Embakasi, Nairobi, and other towns still break the law despite the Energy and Petroleum Regulatory Authority crackdowns.

bambani@ke.nationmedia.com