Energy Regulatory Commission

OVERVIEW OF LPG REGULATORTY

FRAMEWORK IN KENYA

PRESENTED BY:

Eng. Kaburu Mwirichia,

Director General,

Energy Regulatory Commission

WLPGA EAST AFRICA REGIONAL SUMMIT

NAIROBI

6th July 2011

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Energy Regulatory Commission

TABLE OF CONTENTS

Topic Slide Number

• Introduction ……………………………………………… 3

- 2009 Highlights on Kenya ……………...................... 3

- Energy Consumption Chart …………………………. 4

• Policy Framework ……………………………………….. 5

• ERC and its Mandate …………………………………...6 - 8

• Statutory Requirements ………………………………… 9 -11

- Standards Under Development ………………………12

• Liquefied Petroleum Gas ………………………………..13

- Import Vs Production in Kenya ……….... ………….. 14

- LPG Regulations ……………………………………… 15

- Licensing Requirements …………………………..… 15 - 18

• The way forward ………………………………………… 19 - 20

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Energy Regulatory Commission

INTRODUCTION

2009 HIGHLIGHTS ON KENYA

• POPULATION – 38,610,097.

• Pop Density 66.52 persons per square KM

• GDP PER CAPITAL US $ 730

• Area 580,367 KM2

• Water Coverage 2.3%

• Eighth Wonder of the World – wild beast migration from Maasai Mara to Serengeti.

• Main Economic Activities Include Agriculture (Tea, Coffee, Horticulture) And Tourism.

• New Constitution in 2010.

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Energy Regulatory Commission

Energy Consumption

9%

22%

68%

1% Electricity

Petroleum

Biomass

Others

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Energy Regulatory Commission

POLICY FRAMEWORK

Economic Recovery Strategy for Employment and

Wealth Creation, 2003.

Sessional Paper No. 4 of 2004 on Energy.

Energy Act, 2006.

Vision 2030

.

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Energy Regulatory Commission

Energy Regulatory Commission (ERC)

• ERC is a single sector regulatory agency with responsibility

for economic and technical regulation of electric power,

renewable energy and downstream petroleum sub-sectors

including:

• Tariff setting and review;

• Licensing;

• Enforcement of compliance;

• Dispute settlement ;

• Approval of power purchase and network service contracts.

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Energy Regulatory Commission

ERC Mandate

• Issue, renew, modify, suspend and revoke licences and

permits;

• Formulate licensing procedures, enforce and review

regulations, codes and standards;

• Develop regulations necessary for the sector;

• Set, review and adjust electric power tariffs;

• Approve power purchase and network service contracts;

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Energy Regulatory Commission

ERC Mandate cont’

• Investigate and resolve complaints and disputes on any regulated matter;

• Protect interests of various stakeholders;

• Monitor, ensure implementation of, and observance of the

principles of fair competition;

• Collect and maintain energy data;

• Prepare indicative national energy plan;

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Energy Regulatory Commission

STATUTORY REQUIREMENTS

• LPG (Product) standard - KS 03:91:1985

Butane (vp 485), Propane (vp 1430) or Mixture (vp 1380).

• Facility standard – KS 1938: 2006

1. Part 1 - Installations between 500 L and 3000 L

2. Part 2 - Transport in Bulk

3. Part 3 - installations exceeding 500 L

4. Part 4 - Storage and filling

5. Part 5 - Fueling of forklifts trucks and gas operated vehicles

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Energy Regulatory Commission

• Large Consumer sites standard – KS

2122:2008 (code of practice)

• Cylinders standard

– KS 201: 2004 – Unified Valve (under revision)

– KS ISO 1406:1989 – Steel Gas cylinders

– KS ISO 11118:1999 – Tests for cylinders

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Energy Regulatory Commission

Statutory Requirements (cont.)

• KS 06-09:2001 (Parts 1&2) – Safe use of LPG in

permanent dwellings.

• KS 06-09:2001 (Part 3) - Code of practice for filling,

distribution and retailing of LPG.

• KS 06-09:2001 (Part 4) – Requalification of cylinders

(under review).

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Energy Regulatory Commission

Standards Under Development

– Bulk Road tankers.

– Bulk Rail Transport.

– Transport in Bulk - code of practice.

– LPG accessories – burners.

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Demand Current Consumption - 80,000 Metric Tons.

Government Projection - Over 100,000 M.T. in 2 Years

Supply Local refinery (KPRL): 35,000 MT, Balance Imported

After Modernization KPRL to Produce 115,000 Mt

Challenges Availability, Imports Capacity, Storage and

Distribution Facilities, hardware affordability.

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Energy Regulatory Commission

Import versus production in Kenya

• Production

– Crude gives about 2.3% of LPG

– Refinery production is about 35,000 MT

annually.

• Import

– Import Via Vessels size – 1,300 MT

– Average 45,000 MT annually.

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• Legal Notice 121 Effective July 2009.

• Intention to Make LPG Available & Affordable.

• Unified Valve & Regulator for all Marketers –

exchangeability.

• Harmonized Cylinder Sizes – 1 kg, 3 Kg, 6 Kg, 13 Kg – price

competitiveness.

• Cylinder Exchange Pool – Facilitate Collection & Return of

Cylinders to owners/Fillers.

LPG REGULATIONS

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Energy Regulatory Commission

LICENSING OF LPG BUSINESS

• Petroleum Businesses licensed by ERC after Meeting

Defined Criteria per LPG regulations.

• ERC also Issues Construction Permits, Monitor & Enforce

Standards & Practices.

• Ensure Fair & Competitive Market - Once Licensed Play

by Same Rules .

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Energy Regulatory Commission

LICENSING REQUIREMENTS

• Source of LPG – agreement/ letter of intention;

• Environmental Impact Assessment- EIA (NEMA);

• compliance with Physical Planning Act;

• Clearance certificate from Fire department;

• Approved drawings by Local Government ;

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Licensing Requirements contd.

• compliance with Kenya Standards;

• registration with DOHSS as a

workplace;

• Ownership of cylinders - minimum 5000;

• scale calibration (W&M).

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Energy Regulatory Commission

WAY FORWARD

Government Policy • Conservation of Forests – Discourage Use of

charcoal and firewood. • Tackle issues of Affordability & Availability.

Affordability • Taxes Removed on LPG.

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Energy Regulatory Commission

WAY FORWARD

Construct LPG Imports Jetty – KPA and Private

Developer under PPP – ongoing.

LPG Imports Storage Facility

• 6,000 Metric Tons Storage Capacity at Mombasa.

LPG Receiving, Storage & Filling Facility – Nairobi, Eldoret, Kisumu, Nakuru, Sagana.

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Energy Regulatory Commission

ASANTE SANA

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