16 July 2012

Rwanda: Government Seeks to Streamline Fuel Trade

The Minister of Trade and Industry, Francois Kanimba, has tabled before Parliament a bill determining the regulation of petroleum trade in the country.

It applies to the import, re-export, transportation, processing, trade, storage, distribution, wholesale, retail, sale to industrial consumers and related activities as well as installations. Provisions in the bill relate to petroleum products and liquefied petroleum gas (LPG).

Hon. Gonzague Rwigema, the Deputy Chairperson of the chamber of deputies' standing committee on trade which will later scrutinise the bill told The New Times, yesterday, that the bill is welcome particularly as the country looks to harmonise its petroleum sector in line with operations elsewhere.

Rwigema said: "We will later give it more attention and come up with an improved legislation. This is the first time Rwanda is putting up such an important legislation especially as we want to harmonise things as is done by others in the East African community and other countries."

In Article 5, petroleum trade licenses, states that no person shall perform petroleum trade operations (importation, re-exportation, wholesale, retail, storage, installation facilities or transportation) without having obtained a petroleum operating license.

Presently, dealers operate after obtaining certificates of registration - just like any other businesses, from the Rwanda Development Board (RDB).

The director of Internal Trade in the ministry of trade, Robert Opirah, explained that the bill is very crucial.

"Due to the technical and chemical nature of petroleum products, the operations thereof are always sensitive and the lack of proper licensing procedures has often resulted into the proliferation of sub-standards in respect to construction, installation and operation of petrol stations, storage facilities and or refilling plants.

"In order to urgently improve the oil business environment in the country, it is imperative for the oil trade business to conform to international business practices in the petroleum sub-sector."

"Prior to the adoption of the new policy on petroleum trade, we had no other policy direction concerning petroleum business operations and there were no operational, structural, environmental and safety standards that to govern petroleum business transactions."

Opirah explained that the government has already approved a firm policy on petroleum trade to guide the investors and once the new petroleum trade law is also approved, by Parliament, a strong guiding legal framework will be in place to direct petroleum business development. "Today, we do not have any policy on petroleum and there are no operational, structural, environmental and safety standards that that govern petroleum business transactions."

Dealers of petroleum products also seem satisfied with the new bill.

A member of the local petroleum dealers' association who preferred anonymity told The New Times that petroleum traders participated in the drafting of the bill and they are satisfied especially since the legal framework "will bring discipline in the industry."

The trader said: "We have worked with the ministry on the draft law, for almost three years and we gave our observations. There were lots of consultations and this draft is fine especially since if it is passed, it will bring discipline in the industry.

"Business will improve because people usually speculate and enter when prices are good but just exit anyhow when things go bad. Government will also be able to control things since the licenses of those who do not comply with regulations can be revoked."

According to the trader, without the legislation, petrol stations can crop up anyhow in the city and unlicensed dealers often cause harmful market stumbles due to speculation.

Once passed, the National Inspectorate and Competition Authority (NICA), a new regulator whose draft law is as well in the House, will be in charge of issuing trading licenses.

The NICA, as a new regulator will take over all the regulatory functions related to enforcement of standards, competition and consumer protection legal provisions.

Government's view is that NICA is the most suitable regulator to deal with the enforcement of the downstream petroleum policy.

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