1. Legislative Framework

History of Petroleum Regulation in Kenya

The Petroleum Act CAP 116 was enacted in 1948 (with a major revision in 1972) and was the major law governing the petroleum sub-sector until 2006. The petroleum sub-sector was highly regulated with price controls for the main products. When the sector was liberalized in 1994, various challenges were experienced such as proliferation of substandard petroleum facilities and products. To address the challenge, Sessional Paper No. 4 of 2004 set pace for a new law to regulate petroleum sector, hence the Energy Act No. 12 which was enacted in 2006. This Act established the now defunct Energy Regulatory Commission (ERC).

On 22nd March 2019, the Energy Act No. 1 of 2019 and Petroleum Act No. 2 of 2019 were passed into law. This effectively repealed the Energy Act No. 12 of 2006. The new laws established the Energy and Petroleum Regulatory Authority with an added mandate of regulating the upstream and midstream petroleum subsectors.

  1. Infrastructure

Petroleum supply chain is supported by the following critical infrastructure:

(i) Petroleum Receipt and back-loading jetties:

  • Kipevu Oil Jetty (KOT):This is located at Kipevu area, Mombasa County and handles large petroleum vessels. Product is then transferred to the government owned Kipevu Oil Storage Facility (KOSF).
  • Shimanzi Oil Terminal (SOT):This is used for importation of petroleum by small vessels.
  • Mbaraki:This is a privately owned facility.
  • Africa Gas & Oil Limited (AGOL):This is a dedicated LPG facility built under concessionary terms from the Kenya Ports Authority. It is connected to a common user manifold. The only storage depot connected to it is the AGOL mainland facility.
  • Kisumu Oil Jetty:This is located on the shores of Lake Victoria and is used for the exportation of petroleum products to the countries bordering the lake and into the Eastern DRC and South Sudan.

(ii) Petroleum storage tanks: Kenya’s total storage capacity is over 1,500,000,000 litres spread out across the country. Over 700,000,000 litres of this is operated by the Kenya Pipeline Company as primary and intermediate storage.

(iii) Petroleum pipelines: The pipeline system consists of trunk lines and distribution lines from Mombasa running through Nairobi to the Western Kenya towns of Nakuru, Eldoret and Kisumu totaling to about 1,804km.

(iv) Retail networks: Kenya has over 2,762 retail stations. The stations are classified as Tier 1, 2, 3 and 4 depending on land area, services offered and storage capacity.

  1. Licensees

Petroleum licensees are classified into the following categories:

Importers of Petroleum Products (Currently totaled at 94 licensees)

Storage depots (Currently totaled at 27 licensees)

LPG Storage and Filling Plants (Currently totaled at 65 licensees)

Pipeline transportation (1 licensed pipeline transporter)

Refineries (1 licensed refinery)

Wholesalers and Exporters (Currently totaled at 832 licensees)

Transporters (by road for LPG) (Currently totaled at 94 licensees)

Retailers (Currently totaled at 42 licensees)

Petroleum Tankers (Currently totaled at 798 licensees)

Petroleum Drivers (Currently totaled at 432 licensees)

Storage of Crude Oil (There is only one licensed facility)

Some of the companies operate in almost all the above licensable activities. Observance of fair competition is regulated in liaison with the Competition Authority of Kenya.