Proposed Bill Could Remove Pricing Authority from EPRA

The Energy and Petroleum Regulatory Authority (EPRA) may lose its critical role in setting petroleum prices following a proposed Bill currently under review by Members of Parliament.

Kesses MP Julius Rutto has introduced the draft Energy (Amendment) Bill, 2024, which aims to amend section 10 of the Energy Act of 2019. This amendment seeks to remove the authority for setting price ceilings on petroleum products from EPRA, allowing market prices to be influenced by international trends and other factors.

The Bill specifies that its primary intended change is to absolve EPRA from controlling the pricing of petroleum products. This amendment would delete specific regulatory responsibilities related to the importation, refining, exportation, transportation, storage, and sale of petroleum products, except for crude oil.

Currently, section 10 of the Energy Act mandates EPRA to oversee various aspects regarding petroleum products, ensuring a regulatory framework for effective market operation.

As part of an ongoing effort, the Kenyan government began importing petroleum products through a Government-to-Government arrangement starting in April of the previous year, originally intended to last for nine months, but now extended to December this year.

If the MPs approve the proposed Bill, it will not only remove EPRA’s regulatory powers concerning the sale of petroleum products but will also eliminate its oversight on related processes such as importation and exportation.

The draft legislation, however, does not clarify how other regulatory aspects of petroleum, such as importation and exportation, will be managed going forward.

The Parliamentary Budget Office (PBO) has indicated that passing the Bill could save taxpayers an estimated Sh169,478,400 by reducing operational expenses associated with regulatory activities, including staff salaries and maintenance costs.

The PBO further analyzed that enacting the Bill could lead to price liberalization and increased competition among oil marketing companies, potentially lowering petroleum prices for consumers.

However, they caution that there may be risks involved, such as price volatility, quality and safety concerns regarding petroleum products, possible shortages, and disruptions that may particularly affect smaller industry players.

The Bill will move forward for publication and formal introduction for its first reading in the House following the Budget and Appropriation Committee’s review of the Treasury Cabinet Secretary’s insights.

The committee is expected to present its report on the Bill within the next 30 days.