BERA is 'sleeping on the job'
Scores of local retailers within the Liquified Petroleum Gas (LPG) industry have accused the regulator, Botswana Energy Regulatory Authority of ‘sleeping on its job’ and letting some players ‘to do as they please’ and in the process disadvantaging those complying with the laid rules and regulations.
The LPG sub-sector, which is tightly controlled by foreigners (according to studies conducted by the Competition Authority & BERA respectively), is regulated under the Liquefied Petroleum Gas Operations (Regulations) 2018. In the past two weeks, Botswana Guardian has managed to unearth that the industry is besieged with problem, mostly emanating from poor enforcement of regulations by the regulator. As per regulations, any person or entity who seeks to store or sell LPG must first obtain a license from the authority and be in position to build a proper facility for the same.
In the past 2 weeks of our investigations, several aggrieved retailers who have been operating in the sub-sector for the past few years, put the blame of the mushrooming of unlicensed operators (who operate as retailers) squarely on the regulator, stating it has failed to put in place proper surveillance to root out illegal operators, in major cities, towns, villages and settlements. For example, while licensing procedures clearly stipulates that, ‘No person shall conduct a regulated activity without seeking and obtaining a licence from the Authority,’ several unlicensed players in the market, conduct the business of storing and selling of LPG along the roadside in makeshift cages. They continue to transport gas from and to consumers from the same makeshift cages, without any licenses.
This publication has witnessed that, in some villages surrounding Gaborone such as Mogoditshane, Mmopane Block 1, Mmopane, Tsolamosese, Ledumadumane & even parts of Gaborone like Old Naledi, there are some persons or entities who have erected small cages which store cylinders filled with LPG ready for sale, a process which violate LPG regulations. “What happens is that, these individuals, will store the filled gas cylinders in these unlicensed facilities and then sell to consumers.
This activity is not only unlawful, but uncompetitive since we (licensed retailers) have invested heavily in our structures and ensured that we comply with BERA licensing requirements, while these operators make short cuts and profits at our expense,” said one of the downbeat retailers, alleging the process has been going on for some time, without attention of the regulator. Another aggrieved retailer added that, while BERA is seemingly unable to curb the illegal activity, they(retailers) are forced to compete with the illegal traders who do not pay license and regulatory fees. As a matter of fact, BERA which is under the care of Dr Grace Tabengwa, introduced regulatory fees on regulated energy activities in September 2023.
For example, the Gas and Petroleum application fees start at P1000.00 up to P30,000.00, depending on size of plant or activity. The third retailer also chipped in and added that, while per regulations, BERA is supposed to have inspectors around the country for conducting surveillance and fining those who are not complying, the said inspectors are hard to be seen. Retailers are of the view the situation has become worse after the launch and implementation of the Liquefied Petroleum Gas Operations. It does not end there.
BERA is alleged to have been slow to capacitate law enforcement officers on the regulations which will enable them to assist with compliance from time to time. Furthermore, Botswana Guardian understands that, while the Authority has pronounced standalone regulations for the LPG sub-sector, officials within for the sub-sector (at BERA) are housed under the petroleum sub-sector. “We wonder why this is the case since the petroleum industry is totally different from our industry,” said the source.
BERA has assured the public that, consumers who hold cylinders of Quick Gases will not be affected by the cessation of the company. “The Regulator, in collaboration with the local gas companies, is working around the clock to ensure that customers who hold Quick Gases cylinders are not adversely affected by the non-trading of Quick Gases,” read BERA in a statement in 2021. However, three years on, the Authority’s willingness to protect consumers has come under spotlight since the holders of the said cylinders are still stuck with them as (wholesalers & retailers) are refusing to accept them as the business has stopped operating.
The results, said someone within the retail business, has been illegal refilling of the said gas cylinders, a process which distort the market and can have severe consequences of cylinder leaks and explosions happening either at the illegal refilling sites or at the consumer premises. Cylinder distributors are responsible for repair and maintenance of their own branded cylinders. This therefore means that Quick Gases cylinders that are still circulating in the market have for the past three years been illegally filled without any repair or maintenance, a situation one retailer, has described as ‘ a disaster waiting to happen’
Meanwhile, Botswana Guardian has been told that, while BERA has commissioned and approved a study titled ‘LPG market study’ in Botswana as far back as 2021, it has failed to implement some of its recommendations. The report, which was conducted by BERA staff members, among others found out, in Botswana, there is no clear demarcation between LPG wholesalers, distributors and retailers. Some wholesalers sell gas to both retailers and individual customers who under normal circumstances, should be served by retailers.
Thus, wholesalers, distributors and retailers compete for the same customers, reads the report in part. “In the process, it is retailers who suffer the most because they are out-priced by the more dominant distributors and wholesalers,” according to the report. The report has recommended that the local LPG industry should be reorganised to attain the much-needed efficiencies and value for money. “Therefore, the existing 3-tier model where there are wholesalers/suppliers, distributors and retailers should be revised to a 2-tier model comprising suppliers and retailers,”
The study also found out that, the Authority has limited skills and experience to regulate the highly specialised and complicated LPG market. “It is important for BERA to have continuous training and development programs for its employees in the petroleum and gas department,” said the report.
At the time of going to press, BERA had not responded to questions shared with them more than a week ago. Among others, Botswana Guardian inquired if the Authority is aware of some illegal LPG retailers, who sell gas in open spaces without required specialised cages as per regulations, as well as steps which BERA has taken to address incidences of gas refills by non-licensed entities and/or individuals, among others. “With the major incidents that occurred in the petroleum industry in the past few months, the ULP93 fuel contamination at number of service stations country wide and the explosion at one service station in the Northern parts of the country, both incidents possibly being a result of non-compliance to regulations, one is left to wonder if we should expect similar incidents in the LPG sub sector should issues of compliance continue to go unresolved,” said one retailer.