Kenya publishes rules to govern lubricants

The Kenya Energy Regulatory Commission (ERC) is moving to intensify the policing of lubricants businesses, an essential product category in the petroleum sub-sector, but one that has largely operated in a laissez-faire manner over the years.
The commission published the Draft Energy Lubricants Business Licensing Regulations 2013 on May 9, 2013, that are expected to mainstream the industry as well as deal with rogue dealers that have sold sub-standard products.
Increased regulation for the industry was necessary because the government was losing tax revenues due to proliferation of illegal trade, as well as loss of market for legitimate traders and the proliferation of sub-standard products. ERC invited industry players to submit their views on the proposed regulations over the next 40 days.
The regulations require businesses handling lubricants, including importers, distributors, transporters and packagers to have an ERC-issued license that the regulator will give after inspection of facilities.
It also gives ERC officials some leeway to make impromptu inspection visits to facilities used in handling lubricants. The regulations prescribe a penalty of Sh1 million (US$98,270) fine or a one-year jail term for business owners found violating any of the rules.
The regulation is expected to bring order, as well as deal with sub-standard products, to create a level playing field.
It is estimated that East African Community Governments lose in excess of Sh16 billion (US$1.57 billion) in tax revenues, with losses incurred by Kenya accounting for about a third. Lubricants are imposed a 25% duty and a 16% value added tax.
(May 11, 2013)