By Matṧeliso Phulane
Petroleum dealers in Lesotho have expressed misgivings about the mulled fuel and services regulations, describing them as too stringent and lacking their input and buy-in.
This emerged at a Fuel and Services Regulations 2023 validation workshop held in Maseru this week on Tuesday to seek the petroleum dealers’ views after the 1999 regulations were reviewed last year.
Among others, the regulations address licensing – manner of application, requirements for licensing and types of licenses such as oil refinery, oil recycling, oil company, transporters and oil retail.
The proposed regulations also outline procedures to be followed when applying for a license, and fines to be imposed in the event of non-compliance.
In an interview with theReporter, the managing director of Khangline Logistics company, Tieho Khang said for many years, oil companies have predominantly been owned by foreigners because the regulations have been ‘too stringent for Basotho traders’.
Khang stated that fuel entrepreneurs always have been concerned about the old regulations which expected them to have storage facilities of half a million-litre capacity, and now it has been increased to one million litres. The traders want the measurement to be reduced instead.
Part II of the regulations – under licensing – states that, “A person who wishes to apply for an oil company license shall: have own storage facility with a minimum combined capacity of one million litres; have equipment required for storing petroleum products; equipment shall be sourced from a legitimate supplier; be free from leakage, and be highly protected and mitigated from corrosion.”
Khang explained that these new regulations contain a lot of things which need to be discussed. “Not everyone is going to afford that kind of money, just a few Basotho traders. Apart from that, there is no bank that could offer us any loans without a license, since we are required to have that storage capacity first.
“I believe that the only solution is to reduce that required capacity, or we should at least be given temporary licenses while we are still mobilising the finances,” he observed.
Another dealer, Haroon Ahmed of Frontline Motors Petrol Station said he does not agree with some of the sections of the regulations.
“Some of them are reasonable, but there are others that I do not agree with, which should be reconsidered.
“My main concern is the one million-litre storage facility which is quite critical and requires a lot of money. This can only be afforded by foreign entrepreneurs, not locals.
“The regulations should be carefully thought out for the sake of Basotho,” Ahmed noted.
The ministry of natural resources’ director of the department of energy, Jerry Mokhethi Seitlheko, said significant strides have been made in the petroleum industry, necessitating a review of the Fuel Services Control Act of 1999 which are outdated.
Seitlheko pointed out that the old regulations no longer serve the industry well, given the rate at which the industry has grown.
He said last year the ministry held a similar workshop where they discussed the challenges of the previous regulations.
“The ministry through the department of energy, as the regulator, has been experiencing formidable challenges in trying to keep pace with the latest developments in the industry, hence the workshop held last year to discuss them.
“The drafted document we have now is more improved; the aim is to discuss it with the stakeholders and agree on it, then pass it on to the cabinet for approval.
“The department of energy has decided to set up a committee responsible for license applications. In addition, we have decided to develop guidelines which will guide the process of the application,” Seitlheko indicated.
He further revealed that his department has also introduced different categories of licenses, which will make it easier to know what applicants need.
Seitlheko said the only category that requires one million-litre storage is for oil companies, not every company.
“Even though the one million-litre storage may seem to require a lot of money, we want to curb the number of oil companies, taking into account the size of the market we have in the country. We cannot have a lot of companies with only two million people.
“Half a million litres worked 20 years back when the monthly consumption was less than 10 million in the whole country; our consumption now stands at about 22 million litres,” he noted.
Seitlheko added that his department had taken note of the stakeholders’ views and would study and consider them.
