Concerns about fuel safety

Petrol-based businesses don’t have operating permits

According to a recent internal
government review, all petroleum-using businesses in the Cayman Islands have
technically been operating outside the law for a number of years.

The Caymanian Compass has learned
that government is aware of the situation, but that it has not taken action due
to concern that doing so would lead to increased prices at the gas pump.

The Cayman Islands has laws that
regulate the handling and storage of potentially dangerous chemical substances,
such as gas and diesel fuel, to protect the public and ensure that commercial operations
use those substances properly.

But operating permits, which are
supposed to be granted to such businesses under the Dangerous Substances
Handling and Storage Law, 2003, have never been issued. Government has not made
regulations to that law setting out how operating permits are to be granted.

One result is that the Islands’
petroleum inspectorate doesn’t always know the location of every workplace,
vehicle or fuel tank it is supposed to be reviewing for safety purposes. Also,
the lack of fee collection from operating permits means the inspectorate isn’t
getting the proper funding it needs to regulate the local oil and gas industry,
a September 2009 government audit found.

“Until the operating permits are in
effect or a registry system is introduced [for these companies], it will be
impossible to determine how many and where small [fuel] tanks are located,”
Chief Petroleum Inspector Gary McTaggart noted in his response to the audit.

The petroleum inspectorate has
responsibility for ensuring that safe and environmentally sound policies are
maintained at the following: bulk storage terminals, service stations, marinas,
electric utility companies, liquid petroleum gas facilities, compressed air
facilities, industrial and wholesale tanks, and vehicles transporting
petroleum.

Internal Audit Unit staff noted
that the lack of operating permits “effectively causes operators to be in
contravention of the law” and added that it prevented fees for the legally
required permits from being collected.

The review also found that local
lawmakers apparently had little interest in implementing the regulations and
operating permits because they were concerned that the measures would lead to increased
prices at the pump.

“According to the chief petroleum
inspector, the regulations were drafted and approved by the ministry in 2004
and then submitted to the legal department,” the audit report stated. “Over the
years, he has followed up with the [legal] department without success.

“Prior to the finalisation of this
audit, he learned that the submission [of the draft regulations] had been
misplaced by the legal department.”

In his response to the report, Mr.
McTaggart stated that there “has been no urgency on the part of the ministry”
to introduce these new requirements and urged that careful consideration be
given to the issue.

“There is general sentiment or
consensus that there are fees already in place that affect the price of
petroleum in the Cayman Islands,” the response continued. “These fees along
with business licences and LCCL (Local Companies Control Law) licences…run as
high as $125,000 for the major oil companies [and] may affect the retail cost
of petroleum and liquid petroleum gas to the public.”

Mr. McTaggart noted that operating
permit regulations under the dangerous substances law would be resubmitted to
government in August 2009.

Missed inspections

According to the September 2009
audit, 42 per cent of the 267 known workplaces identified as petroleum-based or
using operations were never inspected in 2008. The petroleum inspectorate
admitted that some of those were simply missed, and that a concerted effort
would be made to inspect those areas in the future.

“Workplaces that are not inspected
may be more prone to incidents which may jeopardise the safety of persons,
property and the environment,” auditors wrote.

A register and map of local
workplaces that the inspectorate should review exists, but is incomplete,
auditors found.

The Internal Audit Unit report
revealed that 180 workplaces were not included on the petroleum inspectorate’s
register.

“Not all workplaces have been
identified because of the lack of established regulations, which would require
operators to apply for an operating permit and thus make the department
(referring to the petroleum inspectorate) aware of these workplaces,” the 2009
audit stated.

Mr. McTaggart noted in his response
to the audit report that the petroleum inspectorate faced numerous challenges
in tracking down and inspecting petrol-based operations – some of which are
mobile, like companies that deliver fuel tanks around the Islands.

“Work on the gathering of
information [about these businesses] has been slow due to budget constraints,”
the audit response stated.

“There are those persons who
contravene the planning laws by installing a tank without planning permission,”
Mr. McTaggart’s response continued. “In addition, tanks that have been in place
prior to the formation of this department [the petroleum inspectorate] may not
be identified as ‘petroleum tanks’.”

The inspectorate
noted that a register of companies is nearly complete, but that until operating
permits are in place, the agency will never be sure it has identified everyone
that needs to be inspected.

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