Alcoholic Beverages Association of Kenya (ABAK) Chairman Eric Githua (left) and Secretary Eric Kiniti during a press conference on the proposed Excise Duty (Excisable Goods Management System) (Amendment) Regulations 2023 on February 14, 2023.
Alcohol producers have turned up the heat on the Ministry of Environment, accusing it of overreach in drafting the new waste regulations, which they say will drastically increase their production costs.
According to the Alcoholic Beverages Association of Kenya (ABAK), some of the fees imposed by the regulations amount to double taxation, even as they accused the Ministry of Environment, Climate Change and Forestry, headed by Aden Duale, of failing to carry out adequate public participation.
They want Parliament to repeal the Sustainable Waste Management (Extended Producers Responsibility) Regulations 2024 (EPR Regulations), arguing that it will increase their cost of doing business by up to 70 percent.
“While we support all efforts to promote sustainable waste management, we are afraid that the EPR regulations are more likely to impose an unnecessary and heavy financial burden on the manufacturing sector,” said ABAK Chairman Eric Githua.
“The regulations carry the risk of making businesses untenable as they would increase the cost of making goods and drive it so high that the goods would be unaffordable to make and sell to consumers,” added Githua.
If adopted, the new regulations, which are currently being considered by the National Assembly's Committee on Delegated Legislation, will force Kenyan manufacturers to take greater responsibility for pollution throughout the lifecycle of the products they put on the market.
Under the EPR regulations, liable manufacturers will be required to mitigate the environmental impact of their products from design to end-of-life, including waste collection.
The regulations seek to impose charges on materials used in the packaging of manufactured products.
They are based on the idea that a producer's responsibility for waste management should extend to the post-consumer waste stage, with responsible disposal of the packaging they use.
But ABAK insists that the Ministry of Environment has gone too far.
They want to introduce several fees such as Sh150 per item on all imported packaging materials and finished goods, a 5.0 percent fee to be retained by the National Environment Management Authority (Nema) from registered Producer Responsibility Organisations (PROs), an annual operating licence of Sh100,000 and a registration fee for producers and PROs.
Mr Githua said the Sh150 per item levy on imported packaging materials, in addition to the fees paid to PROs for post-consumer waste collection and management, amounted to double taxation.
This is because manufacturers would effectively be paying PROs a post-consumer waste management fee for the same item for which they paid Sh150 at the point of import.
The per item fee is also ambiguous as it does not explicitly state what constitutes an item.
“At a fee of Sh150 per item, and with the broad categories of goods used in manufacturing that are targeted, the cost of production in the alcoholic beverages industry is going to increase by 70 percent,” said Mr Githua.
ABAK wants the Sh100,000 per annum to be set at Sh10,000 per annum as proposed when the draft regulations were released to the public for comments.
ABAK Secretary Eric Kiniti said alcohol manufacturers and distributors in the country were also concerned about how the new regulations were developed as there was inadequate public participation.
He said the draft that has been published and is now before the Committee on Delegated Legislation contains provisions that have not been discussed, such as per unit fees that are ambiguous and open to abuse, double taxation by paying for waste management at import and post-consumer waste levels, and a 10-fold increase in registration fees.
