The Effect of fuel regulation on consumer protection in Kenya: a case study of Gulf Energy Limited
Mutero, Priscilla Nduta
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Fuel is widely used across all sectors of Kenyan economy with no effective cost-beneficial substitute available. The industry was liberalized in 1994 which resulted in increase in number of independent oil distribution companies in Kenya. Kenya imports all its fuel through the Open Tender System, whereby petroleum products are purchased by a single company for the entire market on the basis of a public tender and shared among all marketing companies in proportion to their share of the market. Over the years, fuel price dynamics became relatively volatile which resulted into the regulation of fuel through the ERC in December 2010.The main objective of the study was to investigate the effect of Government fuel regulation practices on consumer protection (quantity, quality and price of the fuel products) in Kenya. The study was carried out at Gulf Energy Limited. Secondary data on fuel prices and transport costs was collected and analyzed while questionnaires were being administered. A total of 105 questionnaires were administered to employees with 81 actually responding representing a response rate of 77%. In addition, out of the 400 possible responses from consumers, 53% responded and this was considered adequate. The study used a descriptive research design. Questionnaires were the main data collection instruments. In addition, descriptive analysis was used; this included the use of standard deviation, relative frequencies and percentages. The data is presented using charts, tables and graphs. The findings revealed that the relationship between independent variables consumer satisfaction, regulating costs and ensuring or enforcing compliance and dependent variable consumer protection was significant i.e. P<0.05. When fuel regulation factors were considered individually, regulating costs had a very strong positive correlation with consumer protection at 1=.834 followed by consumer satisfaction at r=.661 then ensuring or enforcing compliance at r=.596. This shows that on the overall, the most important factor that affects consumer protection is regulating cost although consumer satisfaction and ensuring or enforcing compliance are also important. Furthermore, when regression analysis was carried out on costs and prices for year 2004-2014, R2 showed that 15.1% of variation in consumer protection is explained by regulating costs. This implies that besides regulating costs, there are other factors under fuel regulations that explain variations in consumer protection which in this study could include consumer satisfaction and ensuring or enforcing compliance. The study recommends that ERC should regulate costs, enhance compliance and ensure consumers are satisfied especially through price stability.