Govt explains why RURA took over petroleum sector regulation

Rwanda Utilities Regulatory Authority (RURA) has assumed the responsibility to regulate petroleum sector in the country as part of Government’s plan to separate policy institutions from regulatory work. The responsibility of policy and regulation activities for petroleum sector in the country has been under the Ministry of Trade and Industry. The development is in line with the recent Prime Minister’s Order of May 10, determining another regulatory body for trade of petroleum and petroleum products and its responsibilities. The Downstream Petroleum Policy Law, promulgated in the Official Gazette in 2013, provided for the Prime Minister Order on establishing another regulator for the petroleum sector. During the petroleum management functions handover ceremony in Kigali last week, the Minister for Trade and Industry, François Kanimba, said the ministry will remain with the overall petroleum downstream policy. He said petroleum traders should fulfill a number of requirements for them to acquire a licence to the business as the law requires. “When you get the licence, there is need for supervision to ensure that you abide by the terms that go with it. That is where there were many gaps compared to how we have been managing the sector because those conditions were not checked on a daily basis,” Kanimba said. “In fact, there is what we have been doing well, but there are also aspects on which we have not performed well,” he added. Kanimba said the ministry does not have enough workers to assume all the petroleum regulation responsibilities, adding that the aspects expected to improve under the new regulation by RURA include quality of fuel, calibration and the setting of prices. Toward petroleum reserve target In its seven-year plan that runs to 2020, the Government opted for a strategic fuel reserve target of a depot that can store fuel worth two months of national need and this would be done in partnership with petroleum importers as provided by the law, according to Kanimba. He said, given that Rwanda is a landlocked country, it put in place a policy ont he need to maintain a minimum fuel reserve so that in case of an emergency situation that hinders the country from importing fuel, at least there is assurance that there is fuel that can sustain the economy for at least three months without serious disruption. He said given the petroleum consumption trends, the country will need to increase its fuel reserves capacity to 90 million litres by 2020. He said the Government will have to provide 60 million litres (for two-month reserve) while the remaining 30 million (equivalent to one-month reserve) will be covered by petroleum importers. “Any petroleum importer should at least have in their commercial reserve, have petroleum that is not less than half of the petroleum they need to trade every month,” the minister said. He said, until this year, the national storage capacity has been about 30 million litres. But petroleum investor SP has completed tanks with capacity of 22 million litres while Oilcom has also installed reserves with capacity of 21 million litres. To attain the minimum capacity of 90 million litres by 2020, Government entered an agreement with SP to manage government strategic reserves, according to Kanimba. Under the agreement, the investor will increase their storage capacity to 60 million litres, up from the current 22 million litres. He said the regulator should be well equipped to be able to monitor the implementation of the agreement. The Director-General of RURA, Patrick Nyirishema, said the body has personnel and department in charge of economic regulation and licences, and will diligently dispense its responsibilities to ensure the success of petroleum sector. “As a regulator we expect that operators will cooperate and make sure that the sector is operating in a fair, equitable manner in accordance with policy and regulations,” he said. Victor Nduwumwami, the chairperson of the Association of Petroleum Importers in Rwanda (ASIMPER), said the new regulatory regime will enhance efficiency and accountability. He said fuel reserve is necessary and that they are ready to play their part. However, he noted that there should be cost for such a reserve. “If you have kept fuel in a tank for long, you are actually storing money. Will this be considered in pricing?” he posed and requested the ministry and RURA to look into the matter to come up with a way forward. Proliferation of fuel stations Meanwhile, Minister Kanimba expressed concern over the rapidly mushrooming fuel stations in the country, hinting at the need to control their growth for them to perform well. There were about 227 fuel stations as per an assessment report by the ministry in 2016. The current average fuel consumption in the country is estimated at 23 million litres per month, translating to 276 million litres per year. editorial@newtimes.co.rw

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Govt explains why RURA took over petroleum sector regulation