Wlpga Guidelines For The Development of Sustainable LP Gas Markets

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The World LP Gas Association
The World LP Gas Association was established in 1987 in Dublin, Ireland, under the initial name of The World LPG
Forum.
The World LP Gas unites the broad interests of the vast worldwide LP Gas industry in one organisation. It was granted
Category II Consultative Status with the United Nations Economic and Social Council in 1989.
The World LP Gas Association exists to provide representation of the LP Gas use through leadership of the industry
worldwide.
The Authors
These Guidelines for the Development of Sustainable LP Gas Markets: Early-Stage Markets Edition have been
coordinated by Renzo BEE (rbee@worldlpgas.com), Chairman of the Global Cylinder Network of the World LP Gas
Association, with valuable contributions from a task force including:
Alex EVANS The Global LPG Partnership (USA)

Abdelkader BENBEKHALED Salamgaz (Morocco)
Mauricio JAROVSKY Ultragaz (Brazil)
Ercüment POLAT Aygaz (Turkey)
Dayo ADESHINA Strategic Energy Ltd. (Nigeria)
Blaise EDJA Oryx Energies (Switzerland)
Makoto ARAHATA Japan LP Gas Association (Japan)
Sunil JHINGRAN Oando Plc (Nigeria)
Nikos XYDAS WLPGA (France)
Ron KEARNEY Ronkearney Ltd (United Kingdom)
Guidelines for the Development of
Sustainable LP Gas Markets
Early-Stage Markets Edition

Contents
Page
Chapter One
Purpose of these Guidelines 4
Chapter Two
The Key Considerations for Increasing National LP Gas Access and Use 8
2.1 Six Main Factors for Government and Stakeholder Consideration 8
2.2 Encouraging Cylinder Investment: the Cylinder Distribution Model 9
2.3 Best-Practice Market Model for Early-Stage LP Gas Markets 10
2.4 Increasing the Number of LP Gas Cylinders in Use 13
2.5 Ensuring Commercial Sustainability of the Cylinder Distribution Model 15
2.6 Evidence of Market Failure and Potential Failure 15
2.7 Making Access to the LP Gas Cylinder Easy and Convenient for the Consumer 16
2.8 How to Ensure a Consistent High Level of Safety for End-Users 18
2.9 How the Right Distribution Model Helps Ensure Public Safety 19
2.10 Encouraging LP Gas Supply Stability 20
Chapter Three
Adding Cylinders into the Market: Implications of Market Model Design Choices 22
3.1 The Implications of Who Owns the Cylinder 22
3.2 The Implications of the Type and Location of Refilling Points:
Centralised vs. Decentralised 26
3.3 How the Marketer-Controlled Cylinder Distribution Model Encourages Expanded
Cylinder and Infrastructure Investment and LP Gas Supply 31
Chapter Four
Implementing the Marketer-Controlled Cylinder Distribution Model 34
4.1 Identifying Cylinder Ownership in a Refundable Deposit Chain 35
4.2 Legally Restricting Cylinder Refilling to the Brand-Owning LP Gas Marketer 35
4.3 Licensing the LP Gas Marketer 36
4.4 Risks from Permitting Consumer Exchanges among Competitors’ Cylinders
and LP Gas Marketer Collection of Competitors’ Cylinders 39
4.5 Implementing the LP Gas Distribution Chain 40
4.6 Enforcing the Rules across the Distribution Chain 40
4.7 Optimising the Investment in Primary LP Gas Infrastructure and Enforcing
Competition in the Distribution Chain 41
4.8 Requirements for Access to LP Gas in Bulk 41
4.9 LP Gas Industry Associations 43
Page 1 Guidelines for the Development of Sustainable Markets - Early-Stage Markets Edition
Chapter Five
Enacting a Specific Set of Regulations to Support and Enforce the Best-Practice Market
and Distribution Model 46
5.1 The Process prior to Introduction of Additional Cylinders into the Market 46
5.2 Licensing the LP Gas Marketer 47
5.3 Licensing the LP Gas Cylinder Distributor 50
5.4 Licensing the Transportation of LP Gas by the LP Gas Marketer 50
5.5 Regulating LP Gas Cylinder Collection and Exchange 51
5.6 Licensing for Bulk LP Gas Storage within Bulk Consumers’ Premises 51
5.7 Sanctions, Penalties and Appeals against a Decision of the Regulatory Commission 52
5.8 Reporting of Investigations and Enforcement Actions 52
5.9 Reporting of Accidents and Fires 52
5.10 The LP Gas (or Energy) Regulatory Commission 53
5.11 The LP Gas Safety Act 53
Chapter Six
Design and Safety Considerations for Cylinders and Refilling 56
6.1 Cylinder Basics 56
6.2 The ADR Agreement: United Nations Model Regulations for LP Gas 58
6.3 Cylinder Valves 59
6.4 Filling LP Gas Cylinders 60
Chapter Seven
Summary of Key Question and Answers 64
Appendix One
Glossary of Main Terms 68
Appendix Two
List of Reference Documents 72
Guidelines for the Development of Sustainable Markets - Early-Stage Markets Edition Page 2
List of Tables
Page
Table One - The Relationship between Annual LP Gas Consumption (in kg per capita) and the Number
of Cylinders in the Market for a Number of Well-Developed International LP Gas Markets 13
Table Two - The Relationship between Annual LP Gas Consumption (in kg per capita) and the Number
of Cylinders in the Market for a Number of Early-Stage LP Gas Markets 14
Table Three - Benchmarks of Number of Cylinders in Use and Number of Retail Outlets 17
Table Four - Examples of Typical Cylinder Sizes 46
List of Figures
Figure One - Typical Cylinder Retail Outlets 18
Figure Two - Example of a Typical LP Gas Cylinder Delivery Truck 19
Figure Three - Facilities of a Major Turkish LP Gas Marketer with its own, Branded Cylinders 25
Figure Four - Examples of Condemned Cylinders Requiring Removal from the Market 26
Figure Five - Example of Cylinder-Filling in a Dangerous Decentralised Filling Centre 28
Figure Six - An Example of a Large BLEVE 29
Figure Seven - A Decentralised Filling Micro-Centre, Open to the Public, where no Safety Rules can be Ensured or
Enforced 30
Figure Eight - Example of an LP Gas Marketer’s Branded Outlet 40
Figure Nine - An LP Gas Registered Distributor’s Trucks in Brazil 41
Figure Ten - Firefighting Water Storage and Pumps in Morocco 53
Figure Eleven - A Cylinder-Filling Carousel at a Filling Plant 53
Figure Twelve - A Failed, Overfilled Cylinder 56
Figure Thirteen - Manual LP Gas Cylinder Valve 58
Figure Fourteen - Self-Closing or Clip-On LP Gas Cylinder Valve 59
Figure Fifteen - Valve with Cap 59
Figure Sixteen - Valve with Anti-Tamper Cap 59
Figure Seventeen - A Cylinder with Tare Weight Indication to Simplify Filling, Heat-Shrink Anti-Tamper Sleeve and
Customer Safety Label 59
Figure Eighteen - A Cylinder Decanting System 60
Figure Nineteen - LP Gas Storage at a Filling Plant and the Fire-Fighting System 61
Figure Twenty - An Uncontrolled Cylinder Filling Facility Filling all Marketers’ Cylinders 61
Chapter One
Purpose of these Guidelines
These guidelines were developed by members of the Global Cylinder Network of the World LP Gas Association
(WLPGA) from the experience acquired by member Liquefied Petroleum Gas (LP Gas) marketers and distributors
across nearly 100 countries over many decades.
Their purpose is to assist countries seeking to realise large-scale adoption and use of LP Gas by households and
businesses on a commercially sustainable basis.
Focus: Early-Stage LP Gas Markets
This Early-Stage Markets Edition of the Guidelines focuses specifically on countries where LP Gas use per capita is still
low: below 10 kg per capita per year, and typically around 2 kg per capita per year. The Mid-Stage Markets Edition
focuses on countries with more advanced markets, where LP Gas consumption is typically around 15 kg per capita per
year. The Mature Markets Edition focuses on countries with advanced markets, where LP Gas consumption is typically
above 30 kg per capita per year.
Focus: The Role of LP Gas Cylinders
LP Gas is used in a vaporous state, but it is stored and transported under pressure in a much denser, liquid state. This
physical virtue of LP Gas permits a significant amount of energy (heat) to be contained in very small space. To be
stored, sold and used, LP Gas requires a dedicated container: in particular, mobile cylinders or larger stationary tanks.
The development of early-stage LP Gas markets depends directly on the effectiveness and efficiency of a national
system for moving the mobile containers safely and efficiently between LP Gas suppliers and end users.
Therefore, these Guidelines focus specifically on how to realise large-scale adoption and use of LP Gas by households
and businesses in mobile cylinders. For purposes of these Guidelines, the relevant part of the national LP Gas market
is defined as cylinders of 50 kg capacity and below. The requirements regarding larger, stationary tanks for effective
LP Gas market development are, with certain important exceptions, a subset of the requirements for effective
development of the LP Gas market in mobile cylinders.
The Unique and Critical Role of Government
These Guidelines serve as a voluntary framework for Governments and other stakeholders, such as National LP Gas
Associations, for creating, updating and/or reforming national LP Gas Distribution Regulations. Appropriate laws and
regulations, adequately enforced, are the single most critical factor in whether widespread access to, and use of, LP
Gas by a country’s households and businesses can be achieved in the near and medium term and sustained for the
long term.
The single most important principle set out in this document is that the distribution model for LP Gas in cylinders—
especially in early-stage markets—must be defined in national law and regulation, with effective enforcement, in
order for domestic LP Gas consumption by households and business to grow meaningfully in the near and medium
term and for the domestic LP Gas distribution system to remain commercially viable over the long term.
There are a number of important issues over which only the Government has authority and capability to regulate and
enforce. This document describes and explains these issues and associated best practices.
Governmental authorities should view these Guidelines as a toolkit for evolving their laws and regulations to facilitate
more rapid scale-up of their LP Gas markets for the benefit of their people, and for understanding the critical role
played by sustained cylinder investment within a well-designed and well-enforced national cylinder distribution
system in the development of a large, sustainable LP Gas market.
A commercially sustainable LP Gas market is one in which a well-designed, well-enforced cylinder distribution system:
 Enables and encourages legitimate LP Gas marketers to make on-going investments to add new LP Gas
cylinders into the market. Continual cylinder investment and re-investment is critical for any early-stage LP
Gas market to grow. Succeeding in this at a national level is much more difficult than it first appears, and
Government must play a critical role in it,
 Enables and encourages legitimate LP Gas marketers to make on-going investments to build dense networks
of distributors that serve cylinder retail points located physically close to end-users—within walking distance
in markets where most consumers do not own automobiles—and/or that perform home delivery, to ensure
widespread and convenient access to LP Gas by the public,
 Ensures adequate public safety. Public safety is both an outcome of a well-designed and effectively regulated
distribution system and, in a virtuous circle, a critical enabler of growth and sustainability of the system over
time.
The Role for Well-Qualified Experts
These Guidelines must not be implemented without considering the existing conditions in a given country. Therefore,
the WLPGA strongly recommends that these Guidelines be used along with input from professionals in the field of LP
Gas distribution and retail with deep, relevant experience in the transition of LP Gas markets from early-stage to mid-
stage. In all cases, a key requirement is that a competent expert in LP Gas distribution and retail must assess the safety
aspects of any national distribution system and its corresponding law and regulation in order to ensure that safety
risks are managed to a level that is acceptably low for that country’s stakeholders and its people.
However, accepting higher safety risks for the sake of faster growth or lower costs is ill-advised, because:
 Inadequate safety puts lives at needless risk,
 Inadequate safety can lead over time to conditions that can undermine the growth and commercial
sustainability of the LP Gas market.
Fiscal and Pricing Policies Regarding Fuels and Equipment
Governments worldwide have experimented with fiscal and pricing policies regarding LP Gas to attempt to stimulate
their domestic LP Gas markets, with mixed results and often severe unintended consequences. These Guidelines do
not discuss issues related to pricing and fiscal policies that are intended to stimulate LP Gas access or use.
Worldwide Lessons for Governments and Other Key Stakeholders
As a toolkit, these Guidelines bring together the shared interests of LP Gas marketers and national regulatory and law-
making bodies to ensure that any decision to expand LP Gas access and use in a country is supported by a good
understanding of the key issues and informed by the main lessons—both success stories and failures—from countries
that have transitioned from early-stage to mid-stage or mature stage, or have failed to do so. By fully utilising the
Guidelines, with support from well-qualified experts, the chances of success in creating a large and sustainable LP Gas
market, driven by a safe and well-controlled expansion of LP Gas cylinders, can be substantially increased.
Further Reading
The global LP Gas industry accepts its responsibilities for operating its businesses in conformity with applicable
supranational, national and local laws, regulations and safety standards.
For further detail on the safety implications of good LP Gas industry practices, please consult the Guidelines for Good
Safety Practice in the LP Gas Industry, a publication of the United Nations Environment Program and the World LP Gas
Association. It can be found on-line here: www.worldlpgas.com/resources/publications.
Chapter Two
The Key Considerations for Increasing National LP Gas Access

and Use
These Guidelines assume that a given country has decided to promote and position LP Gas as the preferred energy for
cooking in the energy mix versus alternative sources of energy. By definition, this means the LP Gas will be distributed
in, and consumed from, cylinders.
It is also assumed that the country’s LP Gas market is “least developed” or an “early-stage market” in terms of LP Gas
consumption and, by extension, the number of LP Gas cylinders in circulation.
The WLPGA characterises an “early-stage” LP Gas market by its relatively low per LP Gas consumption of around 10 kg
per capita per year, or less. Often, “early-stage” markets have LP Gas consumption of around 2 kg per capita, or less.
In a “mid-stage” LP Gas cylinder market, in which a large segment of the population regularly uses LP Gas for cooking,
consumption levels tend to be between 15 to 20 kg per capita per year, with variations due to the climate, diet and
cooking culture.
The Role of Primary LP Gas Supply (Domestically Produced or Imported)
This document assumes that LP Gas can be available to a given country through either domestic production or
importing, or both. If the country’s market participants (i.e., its LP Gas Marketers) are physically unable to obtain LP
Gas supply with adequate consistency, the LP Gas market will be unable to expand.
2.1. Six Main Factors for Government and Stakeholder Consideration
To undertake, to accelerate and to sustain an LP Gas market transition from early-stage to mid-stage, Government
(together with key stakeholders) must consider and address the following six main factors:
1. How to create and to sustain necessary and sufficient conditions for the LP Gas industry to increase
continually and substantially the quantity of safe cylinders in use in the market,
2. How to establish (or to guide a transition to) a convenient (having LP Gas retail outlets within end-user
walking distance), reliable, effective and efficient market-wide cylinder distribution system for filling, refilling,
inspecting, repairing and retiring of LP Gas cylinders,
3. How to ensure a consistent, high level of safety for end-users of LP Gas over time,
4. How to ensure that LP Gas remains physically available to supply the market without interruption or
shortages,
5. How to ensure that financial flows from LP Gas consumers back to the investors in LP Gas cylinders and to the
suppliers of LP Gas remain adequate for the legitimate participants in each part of the supply chain to
perform their role and to grow over time,
6. How to align and optimise governmental fiscal and pricing policies (if any) regarding LP Gas and LP Gas
equipment (domestic and imported) relative to competing fuels.
Important note: Although subsidies or taxes on LP Gas and LP Gas equipment and appliances, and the availability,
cost, and level of subsidies or taxes on competing fuels, will be key economic factors in whether the market for LP Gas
can expand sustainably, a discussion of these fiscal considerations is not part of the scope of this document.
Central to all of these considerations is the national cylinder distribution model.
2.2. Encouraging Cylinder Investment: the Cylinder Distribution Model
The Uniqueness of LP Gas as an Energy Source
LP Gas has one thing in common with other petroleum-based energy products, and one large difference. Together,
these things require LP Gas to have special treatment in law and regulation, in enforcement of law and regulation, and
in the design of the national LP Gas market and distribution system:
1. The contents of a filled cylinder of liquefied petroleum gas, if unsafely released (intentionally or
unintentionally), can be dangerous. This is also true of many other energy products, to varying degrees,
2. LP Gas cylinders are highly portable and are therefore easy to lose control over, whether due to piracy (theft
by an illegitimate competitor), smuggling into another market, or for other reasons.
The main obstacles to sustainable growth in an early-stage LP Gas market arise from these two characteristics.
Establishing Conditions that Encourage Private Sector Investment in LP Gas Cylinders
Cylinder inventory is often the largest single category of investment across the entire LP Gas supply chain in any
market. This is especially so for early-stage LP Gas markets.
The most significant business decision to be taken by the private sector is therefore whether to invest in additional LP
Gas cylinders to expand the LP Gas market.
A key role for Government, with cooperation from other stakeholders, is to create a set of sustainable conditions that
give the private sector enough confidence to invest in additional LP Gas cylinders, and the facilities to fill them and
distribute them, in spite of the risk that these cylinders—and the economic value they represent—can be easily lost
due to factors often outside the investors’ control.
By comparison, LP Gas infrastructure like storage, primary transportation, depots, cylinder filling plants, and so on is
not “mobile”. It always remains under its owner’s control.
For an early-stage LP Gas market, one of the primary objectives for Government (and other stakeholders) is to keep
the risk of loss of control over the cylinder sufficiently low that sustained, large-scale cylinder investment will occur.
Where this risk is not kept low enough, the outcome—seen too often in early-stage markets—is a dramatic increase in
LP Gas fires and explosions caused by widespread negligence around safety practices. The negligence is usually on the
part of illegitimate filling and distribution competitors who operate without conforming to governmental licensing
requirements and governmental regulations, and who escape Government’s enforcement efforts.
By the time such fires and explosions occur, the market may already be dysfunctional and cylinder investment in
decline. Fires and explosions cause the public to fear LP Gas. This public fear, combined with market dysfunction, can
lead to lasting stagnation or decline of the national LP Gas market.
Assigning and Enforcing Liability
Along with governmentally-enforced rights to property come responsibilities and liabilities. Liability regarding non-
mobile LP Gas infrastructure is easily assigned and enforced. There is rarely any doubt about who controls the non-
mobile infrastructure.
This is potentially much less true with mobile LP Gas cylinders. Additionally, end-users in an early-stage LP Gas
market—particularly household end-users—cannot be assumed to have sufficient LP Gas knowledge to be able to
bear any liability as a practical matter.
As a result, the role of Government regulation and enforcement is even more important regarding property rights in,
and responsibilities and liability for, LP Gas cylinders.
Worldwide Best Practices for Encouraging Investment and Managing Risk and Liability
The experience of many successful national LP Gas markets worldwide shows that there is one particular cylinder
distribution model which is significantly more capable of addressing all these issues, and significantly easier for
Government to enforce the necessary laws and regulations, than any other in an early-stage market.
Left to itself, the private sector in an early-stage LP Gas market may evolve a different model—or multiple competing
models—based on the self-interest of the individual market participants. Such self-evolved early-stage LP Gas markets
tend not to develop, or to develop extremely slowly, and they tend to have much higher safety risk to the public and
much higher financial risk to legitimate LP Gas companies. The main reasons for this are explained later in this
document.
It is therefore essential for Government in a country with an early-stage LP Gas market to define and enforce certain
essential rules that will maximise the opportunity for the LP Gas market to develop rapidly, efficiently, safely and
sustainably and to benefit from healthy competition among legitimate companies at all appropriate levels of the
supply chain.
Adapting this common distribution model to the specific policy goals and circumstances of a given country is clearly a
local decision. However, there are implications for neighboring countries’ markets: local decisions in one LP Gas
market can sometimes affect adjacent LP Gas markets.
Many countries with early-stage LP Gas markets have sought assistance from the WLPGA. The WLPGA believes that
the global experience of its members, as generalised in these Guidelines, can orientate Government in setting the
rules and regulations for the development of a country’s LP Gas market through safe and orderly expansion of the
quantity of LP Gas cylinders in circulation.
2.3. Best-Practice Market Model for Early-Stage LP Gas Markets
The main questions for Government and other stakeholders, for any market model, are the following:
1. Who is permitted to own the LP Gas cylinder once it enters the market?
2. Who is liable for the LP Gas cylinder over its life?
3. How is liability and responsibility for the safety of a cylinder enforced?

4. Who is permitted to fill and refill LP Gas cylinders, and under what conditions and limitations?
5. Who is permitted to obtain LP Gas for the purpose of filling and refilling cylinders?
6. What kinds of LP Gas cylinders and accessories (such as valves) are permitted to be used?
7. What technical, operational and safety standards must be followed by LP Gas market participants?
8. What fiscal and pricing policies (if any) should Government adopt regarding LP Gas and LP Gas equipment and
regarding competing fuels and equipment?
9. In what ways will LP Gas market participants’ behavior be regulated by Government?
10. What are the penalties when an LP Gas market participant does not comply with applicable laws, national
standards, regulations and license terms?
There are a number of supplementary questions which are discussed later in this document.
All of these questions are important, and they are interrelated. All of them, when answered, lead to rules for how the
LP Gas market will operate, for the mutual benefit of all participants and the public.
Government is the only stakeholder with the authority and capability to define and enforce these rules.
World experience has shown that if the rules associated with any one question are poorly designed, are inconsistent
with the rules associated with other questions, or are poorly enforced, a country’s early-stage LP Gas market may
develop only very slowly—or not at all.
The First Question: Defining a National Cylinder Distribution Model
The following chapters of this document discuss these inter-related questions as a group in substantial detail.
As a practical matter, only once the first question is addressed—who is permitted to own the LP Gas cylinder once it
enters the market?—Can Government and stakeholders address the remaining questions? A brief introduction to this
first question follows. It is discussed more fully in Chapter 3.
There are two main models in use worldwide for cylinder distribution:
1. The Marketer-Controlled Cylinder Model. This model is used successfully in most countries around the
world,
2. The Customer-Controlled Cylinder Model. A few developed countries use this model successfully. In most
developing countries where this model has been tried, it has had to be abandoned and replaced with the
Marketer-Controlled Cylinder Model.
In some countries, a third model may coexist on a small scale: the Distributor-Controlled Cylinder Model. In early-
stage markets, the Distributor Controlled Cylinder Model tends to fail (that is, it tends to lead to greater market
dysfunction, lack of cylinder investment, and higher risk to public safety). It introduces risks which are more difficult to
manage and which, therefore, require a much more intensive level of Governmental oversight and enforcement of the
LP Gas market, including both its legitimate and illegitimate participants. This model is sometimes successful in mid-
stage markets and mature markets, particularly to serve LP Gas users who take small cylinders to go camping.
The Marketer-Controlled Cylinder Model has the following key characteristics:

1. Governmentally-licensed LP Gas marketing companies (LP Gas marketers) are the only parties legally
permitted to introduce LP Gas cylinders into the market,
2. These cylinders are marketer-branded and must conform to a set of national standards,
3. LP Gas marketers retain sole ownership of these cylinders throughout the cylinders’ lives. The marketers are
generally liable regarding the safety of the cylinders throughout the cylinders’ lives,
4. LP Gas marketers are the only parties legally permitted to fill and refill their own cylinders,
5. LP Gas distributors and end-user customers who take possession of LP Gas cylinders do so upon paying a cash
1
deposit. The amounts of the deposits are determined by the LP Gas marketer . The distributors and end-user
customers do not take actual ownership of the cylinders,
6. The customer exchanges his/her empty, branded LP Gas cylinder for a full LP Gas cylinder of the same brand,
7. The empty cylinder is returned to the original LP Gas marketer (via the LP Gas marketer’s distribution
network) for proper testing and inspection, refilling, maintenance and repair if required, and scrapping if
required,
8. Competition between marketers manifests itself in the freedom to invest in owned cylinders and in the forms
of distribution beyond the refilling step, as explained in 2.7.
Description of the Main Cylinder Distribution Models and their Consequences
The history of LP Gas cylinder introductions across the world has taught that the most effective cylinder distribution
model is where
 The LP Gas marketer invests in and controls a population of branded cylinders,
 The LP Gas marketer provides cylinders to customers on a refundable cash deposit basis,
 Customers exchange empty cylinders for full cylinders as required.
A number of markets in around the world have experimented with other models of cylinder ownership, but in the
majority of those cases, local regulators were forced to shut down the chosen alternate model because of widespread
loss of control over cylinders by legitimate market participants and to transition to the Marketer-Controller Cylinder
model.
We will, however examine both cases for adding new cylinders into the market to serve new LP Gas consumers.
Case 1: The Cylinder is Purchased at Retail and Owned by the LP Gas Consumer
The potential consumer of LP Gas purchases a generic (non-branded) cylinder from a retail outlet and is the owner of
the cylinder for the cylinder’s lifetime. Typically, the cylinder seller will be a retailer of cooking or heating appliances
or be a supermarket or do-it-yourself (DIY) outlet. The consumer goes to a cylinder refilling location to get his/her
cylinder refilled. There must be a large network of local refilling points to enable consumers to have their cylinders
refilled. The consumer is at liberty to take his cylinder anywhere he/she likes to have it refilled and will typically
choose the cheapest or the most convenient location. There is no incentive for the refiller to inspect the cylinder,
because if the refiller finds the cylinder defective, the refiller will not be able to sell the consumer LP Gas. The
consumer does not want this, as s/he would have to buy another cylinder to replace the defective one. Under this
model, the cylinder is rarely—or never—inspected, maintained or tested, and the expertise to deal with cylinder
issues does not exist at such retail facilities. When cylinders are discarded, they become a hazard to public safety.
Case 2: The Cylinder is Owned by the LP Gas Marketer and Provided to the Consumer in Exchange for a
Refundable Deposit
The consumer obtains the right to use the cylinder against the payment of a refundable deposit. The cylinder remains
the legal property of the LP Gas marketer. The cylinder is identified as the property of the LP Gas marketer by
stamping and by painting with a particular colour and logo.
When the cylinder becomes empty, the consumer exchanges it for a full cylinder of the same brand in any of the
marketer’s network of retail outlets. Provided the LP Gas marketer ensures, in accordance with law and regulation,
1
In some countries, the amount of the deposit is subject to Government regulation and/or is subsidised by Government.
that only good-quality, safe cylinders are available for exchange, if the customer’s cylinder has become defective, the
replacement cylinder will be in good condition and the defective cylinder can then be removed from circulation.
When the customer wishes to change LP Gas suppliers, or no longer desires to use LP Gas (for example, upon
connecting to a natural gas grid), he/she returns the cylinder to his/her retail outlet and is refunded the original cash
deposit.
The LP Gas marketer is responsible for the safety of the cylinder and compliance with national standards and
regulations. If a cylinder does not comply, the LP Gas marketer removes that cylinder from circulation and replaces it
with a new one at no additional cost to the consumer.
The goal of the consumer is to have a readily available, affordable, and clean supply of energy in a good-quality
cylinder. The responsibility for the safety and operability of the cylinder is of no direct interest to the consumer as
long as the LP Gas marketer is properly ensuring safety and operability.
A more complete explanation of this model, its implications for market design and Government regulation, and the
rationale for defining and implementing this model in an early-stage LP Gas market, are given in the next Chapter.
2.4. Increasing the Number of LP Gas Cylinders in Use
There are many countries with very low LP Gas consumption (2 kg per capita per year, or less) that have the necessary
primary LP Gas infrastructure to support much larger levels of consumption. Such infrastructure might include LP Gas
import terminals or other local supply sources (e.g., oil refineries), and multiple plants for filling LP Gas cylinders.
However, in many such cases, little or no growth has occurred in the number of cylinders in circulation, and additional
cylinders are not being added into the market.
By comparison, countries that grew their LP Gas consumption to 15 kg per capita per year or more did so following
heavy investing and reinvesting in LP Gas cylinders. These countries typically achieved over time a ratio of
approximately one cylinder in circulation for every two to three persons in the country. The most common size of
cylinder in use, once these LP Gas markets developed from early-stage to mid-stage, was 12 kg (25 lbs.).
A 1:2 or 1:3 ratio of cylinders to population implies a high level of sustained investment in cylinders by the private
sector. In fact, the level of private sector investment in cylinders has often exceeded the level of investment in
primary (non-mobile) LP Gas infrastructure in the country.
Tables 1 and 2 below show examples of LP Gas consumption and cylinders in use for a number of countries with early-
stage, mid-stage and mature markets.
Table 1 The Relationship between Annual LP Gas Consumption (in kg per capita) and the Number of Cylinders in the
Market for a Number of Well-Developed International Markets.
Country Population (Millions) Consumption LP Gas Millions of Number of Cylinders in

Kg/Capita Cylinders in Use Use per 1000 Capita
Brazil 196 29 100 510
Morocco 32 45 20 625
Turkey 75 12 100 1 333
Japan 128 57 50 391
Indonesia 242 18 58 240
Notes: Where natural gas infrastructure develops in a country, LP Gas becomes an energy source for consumers not
on the natural gas grid, with a relatively lower consumption per capita compared to countries without natural gas
infrastructure. The high number of cylinders per person in Turkey at 1.3 is equivalent to six cylinders per family, a
relatively large number; it is due to the fact that LP Gas cylinders were used for space heating in Turkey before natural
gas became widely available to households and businesses.
Indonesia is a well-publicised success story for the investment in and distribution of 54 million new LP Gas cylinders in
three years’ time, successfully transitioning approximately 85% of its population to LP Gas from kerosene.
For more information, see the WLPGA report “Kerosene to LP Gas Conversion Programme in Indonesia”, available free
from WLPGA at: www.worldlpgas.com/resources/publications.
Example: Nigeria
Nigeria today has plentiful domestic LP Gas supply, but very low consumption. The number of LP Gas cylinders in
circulation is small, relative to its population: approximately 1.8 million cylinders. That is a ratio of approximately
one cylinder per 90 persons.
At a ratio of one cylinder for every three persons, it would be necessary to invest in about 50 million cylinders, which
translates to about 1,000 million Euros.
The challenge for Nigeria is to define and implement conditions which encourage such an investment in a sustainable
manner and preserve it over time.
Key Lessons:
It is not enough only to encourage cylinder investment. It is also necessary that, once investment is made, the supply
and distribution system continue to function well, so that financial returns on the cylinder investment are realised for
legitimate market participants.
Too often, companies in Nigeria (and in many other developing countries) have invested in new cylinders, but the
required financial return on the investment is not realised due to a combination of external conditions, and further
investment in cylinders is therefore not made.
Usually, the only party with the authority and capability to address those conditions is Government.
Table 2 The Relationship between Annual LP Gas Consumption (in kg per capita) and the Number of Cylinders in the
Market for a Number of Early-Stage LP Gas Markets.
Country Population (Millions) Consumption LP Gas Millions of Cylinders Number of Cylinders in

Kg/Capita in Use Use per 1000 Capita
Haiti 9 1.3 0.1 11
Nigeria 160 0.8 1.8 11
Indonesia before 242 3.3 2.5 10
Conversion
Notes: Some countries have a low level of consumption of LP Gas because of subsidised competition from other fuels.
Examples include subsidised electricity (Honduras), subsidised natural gas (Bangladesh), or subsidised kerosene
(Indonesia prior to its LP Gas conversion programme).
2.5. Ensuring Commercial Sustainability of the Cylinder Distribution Model
For any LP Gas marketer to enter a market, it must deploy a meaningful quantity of costly LP Gas cylinders and build a
distribution network to make refilled cylinders accessible and available to consumers.
If the LP Gas marketer loses control of its cylinders, the cylinders may quickly disappear from the legitimate LP Gas
market and reappear in a gray or black LP Gas market. In a grey/black market, other small “entrepreneurs” emerge to
refill these cylinders at below-market prices, almost always without any knowledge, capability or desire to follow safe
and thorough cylinder inspection, refilling and maintenance processes.
Under such conditions, absent effective intervention by Government regulators and/or their enforcement agents:
 The LP Gas marketer that invested in, and still legally owns, this cylinder loses permanently the ability to
generate income from the asset,
 The end user has an unsafe product in a cylinder which may never again be inspected or maintained to
ensure its integrity and safety,
 The LP Gas marketer that invested in this cylinder may not have seen the cylinder for a considerable period of
time and desires not to be liable for any damage (such as fire or explosion) from its use or storage. However,
the LP Gas marketer’s brand (colours, logo, stamp) are still on the cylinder. The grey/black market
entrepreneur, if faced with a liability issue or legal challenge, will simply disappear, usually resurfacing later
elsewhere,
 As a consequence, the LP Gas marketer is no longer able to justify, financially, any investment in additional
cylinders. Because the grey/black market entrepreneurs also do not invest in new cylinders, no one does.
The cylinder market eventually stagnates, or declines.
In order to protect the investment in cylinders by the LP Gas marketer, the ability to refill a given cylinder must be
legally restricted to the LP Gas marketer that owns the cylinder, and this legal restriction must be rigorously and
effectively enforced. That allows the LP Gas marketer to maintain a much greater level of control over its cylinder
population and helps minimise the emergence of grey/black market activities which undermine the economics of the
LP Gas business for legitimate companies and which lead to unsafe conditions for the public.
Where a different model is in use in an early-stage LP Gas market, it is recommended for Government and key LP Gas
market stakeholders to plan and carry out an orderly, safe transition from present conditions to a the Marketer-
Controlled Cylinder Model. This includes, in particular:
1. Recertifying or scrapping old cylinders, based on their condition,
2. Relicensing the existing companies along the LP Gas supply chain,

3. Updating laws and regulations in support of the new model,
4. Updating governmental enforcement capabilities.
2.6. Evidence of Market Failure and Potential Failure
There are three categories of evidence which indicate that the national LP Gas market model and the associated
cylinder distribution model are, or have become, dysfunctional:
1. Lack of new, legal cylinders being added to the market,
2. Lack of growth in the volume of LP Gas consumed by end-users,
3. Increase in the frequency of fires and explosions associated with LP Gas.
In many countries, Government does not become aware that the LP Gas market model and cylinder distribution
model are at risk of failing to deliver safe and sustainable growth in the LP Gas market until case three occurs—a surge
in fires and explosions—and is brought to Government’s attention by the public or the media.
That is because an initial increase in LP Gas cylinders or LP Gas consumption in the market can mask underlying
problems that lead to serious public safety issues. These public safety issues, as explained elsewhere in this
document, typically contribute to the first two categories: lack of further cylinder investment and stalled or declining
growth in LP Gas consumption.
All three are lagging indicators. When such conditions arise, serious problems are already likely to exist in the
functioning of the LP Gas market.
These problems are preventable. While these Guidelines do not discuss specific strategies and methods for
monitoring these three conditions, it is nonetheless important for Government to monitor them. It is critical for
Government to establish appropriate laws and regulations and adequately enforce them in order that the LP Gas
market develop and grow without experiencing these conditions.
As mentioned earlier, appropriate law and regulation, adequately enforced, are the single most critical factor in
whether widespread access to, and use of, LP Gas by a country’s households and businesses can be achieved in the
near and medium term and sustained for the long term.
2.7. Making Access to the LP Gas Cylinder Easy and Convenient for the Consumer
Most countries with high per capita LP Gas consumption have developed local distribution networks that place
supplies of filled cylinders physically close to the consumer, through a dense network of retail outlets. The objective
of such networks is to have cylinders available within a 5-10 minute journey on foot from the consumer’s home or
place of business.
It is in the distribution system where intensive competition among LP Gas marketers does, and should, occur. Some
markets have seen retail cylinder distribution through appointed exclusive distributors that serve dense networks of
retail outlets or that deliver directly to consumers. In other cases, LP Gas marketers may establish their own branded
retail outlets served by their own fleet of trucks. In other, typically mature, markets, LP Gas marketers may set up a
meter connected to the cylinder at the consumer’s home or business and invoice periodically based on the quantity of
LP Gas consumed.
Some countries have implemented home delivery of cylinders as a complement to networks of retail outlets (e.g.,
Turkey), or instead of such networks (e.g., India, Japan).
The range of models for final-stage distribution (sometimes called “last mile” or “last kilometre” distribution) permits
competitors to differentiate in order to serve the widest range of customers’ needs in a given market.
Typically, lower distribution costs can be achieved compared with home delivery by using local shops as cylinder retail
outlets. With such nearby sources of pre-filled replacement cylinders, provided there are no (or few) LP Gas shortages,
consumers typically do not deem it necessary to obtain back-up cylinders. A high density of retail points for LP Gas
cylinders therefore reduces the overall cost to be an LP Gas customer, because the need for a back-up cylinder is kept
very low.
Retail outlets like petrol (gasoline) stations or large supermarkets are also common parts of LP Gas distribution
networks. However, these types of retail outlet are often not within five minutes walking distance of the point of use.
They require a vehicle to transport the cylinder to and from the point of use. In developing countries, a vehicle may
not be available to the majority of consumers.
These types of retail supply point are most appropriate where LP Gas consumers have vehicles, usage of cylinders is
low (or cylinders are of a larger size), and control of distribution costs from reducing the complexity of the distribution
network is an important factor in the economics of the LP Gas marketers and their distributors.
In the context of these guidelines, when most consumers have lower incomes and/or are without vehicles, only a very
dense local network of local retail outlets, sometimes combined with home delivery by the retail outlets, will meet
customer needs at a low distribution cost.
Examples:
Japan
The distribution model in Japan requires two LP Gas marketer-owned cylinders per household, connected to a meter.
The consumer pays monthly based on consumption recorded by the meter. In this market, the marketer has a legal
obligation to intervene within 30 minutes if the consumer calls to report a gas emergency.
Vietnam
In Vietnam, the legal distribution model involves exchange of empty for filled cylinders of the same brand at the LP
Gas marketer’s registered retail outlets, complemented by a home delivery system operated by the retail outlets.
Brazil
In some other countries like Brazil, the legal distribution model permits both home delivery and exchange of empty
for full cylinders at retail outlets.
In Brazil, 60% of LP Gas consumers are served via home delivery, and the remaining 40% are served via the retail
outlets. In the case of home delivery, the consumer must keep at least two cylinders of LP Gas at home, and an adult
must be at home to receive the delivery. This mode of service is thus more common for wealthier households having
a vehicle and one or more service staff.
Table 3 shows the relationship between the cylinders in circulation, number of retail points, populations, and home
delivery percentage for several of mid-stage and mature LP Gas markets.
Table 3 Benchmarks of Number of Cylinders in Use and Number of Retail Outlets
Country Million of Cylinders Number of Retail Number of Retail Outlets per Percentage of
in Use Outlets Million Inhabitants Delivery at Home
Brazil 100 45,000 230 60%
Morocco 20 24,000 750 <5%
Turkey 100 22,000 306 100%
Japan 50 23,100 180 >90%
India 210 Delivery at home About 10 million delivery >95%
trucks
Notes: The Morocco figures reflect a concentration of retail outlets typical of a mid-stage or mature market where
home delivery is not used.
The Turkey figures reflect a typical mid-stage or mature market that utilizes 100% home delivery.
Figure 1 shows pictures of typical retail outlets from countries mentioned in Table 3.
Figure 1 Typical Cylinder Retail Outlets

Left: Morocco; Right: Vietnam
Home delivery and metering system in Japan
2.8. How to Ensure a Consistent High Level of Safety for End-Users
If the distribution model fails to ensure strict compliance with, and application of, good cylinder management
practices, including:
 The removal of all damaged or defective cylinders from the distribution chain,
 The return of all defective cylinders to the filling plant for repair, retesting or scrapping,
 The replacement of all cylinders removed from the market with new cylinders.
Consumers will then increasingly experience safety issues causing possible property damage and injuries. Public
confidence in the safety of LP Gas will fall, and the market is likely to experience an increase in other unsafe practices
as non-compliant competitors increasingly obtain each other’s cylinders to keep supplying their customers. In these
circumstances both customer and marketer suffer and market growth stops.
Potential customers require education to overcome potential concerns the safety of LP Gas. However, when LP Gas
and LP Gas cylinders remain in a closed system for their entire lifecycle, as described above, and cylinders are handled
and used as intended, safety incidents are rare, consumers’ fears are both lessened and easier to mitigate through
education.
The excellent global customer safety record for LP Gas is a direct result of the capability of the Marketer-Controlled
Cylinder Distribution Model to cause market participants to:
 Make on-going investments in very robust, high-quality cylinders and cylinder designs,
 Inspect all cylinders thoroughly and completely whenever they are refilled,
 Ensure strict compliance with correct refilling procedures, to ensure no over-filling (a safety issue) and no
leakage from the cylinder body or valve,
 Apply cylinder maintenance and scrapping regimes rigorously,
 Ensure safe transportation of the cylinder, in particular to avoid any abusive cylinder handling leading to
cylinder damage.
Figure 2 Example of a Typical LP Gas Cylinder Delivery Truck
Chapter 6 addresses the key issues surrounding LP Gas cylinder safety.
2.9. How the Right Distribution Model Helps Ensure Public Safety
Cylinders of substandard design or manufacture, or that are not properly inspected and tested for safety and integrity
before and after refilling, inevitably lead to leaks or failures that can cause fires and explosions that damage property
and cause injury.
It is critical that the national laws and regulations applicable to LP Gas mandate both standards for cylinder design and
manufacture and for proper inspection and testing of cylinders by licensed, qualified LP Gas marketers. Both topics
are discussed in more detail in Chapter 4.
Similarly, the cylinder must be filled under strict quality-control conditions to ensure that refilling is done properly and
safely for the protection of the filling plant operator and its personnel, of the distribution network, and of the end-
user.
Once a cylinder has entered the market, each time it is filled or refilled it must be inspected for damage, corrosion or
leakage prior to filling and re-inspected for leakage from the valve after filling. If the cylinder does not pass inspection,
it must be removed from the market by the LP Gas marketer.
The Marketer-Controlled Distribution Model ensures transparency and accountability in the responsibility chain for
every cylinder, for the benefit of the end-user and all market participants.
Under other distribution models, transparency and accountability are much more likely to become unclear or
uncertain. This contributes to loss of control over cylinders by the parties intended to be accountable for them and,
as a consequence, to increased risk of property damage and injury.
2.10. Encouraging LP Gas Supply Stability
Frequent or prolonged shortages of LP Gas can cause LP Gas marketing and distribution business to fail and consumers
to lose confidence in LP Gas as a reliable source of fuel. They can also drive up the cost of LP Gas.
Encouraging International LP Gas Traders to Sell into the LP Gas Market
Countries which rely wholly or partially on LP Gas imports are subject to decisions by international LP Gas traders
about whether to sell LP Gas into their markets, or instead to sell LP Gas into other markets.
In a way, importing countries compete with other countries in their region, and sometimes globally, to obtain LP Gas.
An international LP Gas trader will make a decision about whether to provide a quantity of LP Gas to a given country’s
authorised LP Gas importers on the basis of several factors, including:
1. Geographic price differences (that is, price arbitrage),
2. Confidence in the capability of the buyer(s) to pay on time and in full,
3. Confidence in the ability of the buyers’ market to consume its supplies of LP Gas within an appropriate period
of time. This requirement exists because shipping LP Gas internationally and utilising import facilities (such as
primary storage tanks) have lead times and cycle times with economic consequences to both the trader and
the importer(s).
The second and third factors—the ability of buyers to pay, and of the market to absorb imported LP Gas—is a function
of the ability of the country’s LP Gas distribution system to deliver LP Gas to consumers efficiently and effectively and
to deliver financial returns to the legitimate LP Gas supply chain participants.
The better the distribution model is able to accomplish those things, the more willing LP Gas traders will be to provide
LP Gas to a country’s importer(s) at the time the LP Gas is needed.
Conversely, if the national LP Gas distribution system is ineffective, or the LP Gas market is dysfunctional, the country
will be less attractive to international traders as a potential destination for the LP Gas they sell.
How Importing of LP Gas by LP Gas Marketers Increases Supply Stability and Minimises Cost
Because LP Gas marketers have control over both the market’s LP Gas cylinders and the distribution networks to the
end-users, they are in the best position in any market to measure inventory levels and forecast demand and, in view
of their measurements and forecasts, to make accurate long-term volume commitments to bring LP Gas supply into a
market and to make accurate short-term purchases to deal with unexpected fluctuations or delays in supply.
This leads to added stability in the level of supply of imported LP Gas into the market, and it lowers the system-wide
cost of imported LP Gas.
Cost is reduced by:
 Eliminating the need for an additional layer of profit margin for an importing company,
 Ensuring that imported LP Gas is immediately flowed into the distribution network instead of remaining in
storage facilities at the port of entry, where it can incur ongoing storage costs and lead to demurrage costs (if
ships cannot unload new LP Gas because the port storage facilities are too full).
Conversely, independent importers of LP Gas often experience more supply and cost volatility precisely because they
cannot adequately forecast consumption, commit to supply, and manage or ensure the timely off-take of supply. This
volatility in both supply and cost are passed downstream to the other market participants and (where price is not
regulated) to the end-user. That volatility reduces consumer confidence in LP Gas and at times limits which
consumers can afford refills; in turn, access to LP Gas is reduced for end-users.
In addition, and where prices are regulated, the volatility affects the ability of LP Gas marketers and their distributors
to make adequate margins to sustain their operations, and/or to invest in new equipment—and in the case of LP Gas
marketers, new cylinders.
For this reason, putting the responsibility of LP Gas importation in the hands of stand-alone importing companies,
rather than LP Gas marketers, is not recommended in early-stage LP Gas markets.
For a discussion of certain exceptions to this, please see the paragraphs on shared infrastructure and on bulk
importation in Sections 4.2, 4.7 and 4.8.
Chapter Three
Adding Cylinders into the Market: Implications of Market

Model Design Choices
This Chapter discusses the implications of how choices made by Government and by other key stakeholders when
implementing a market model and its cylinder distribution model affect the development and the commercial
sustainability of the national LP Gas market.
3.1. The Implications of Who Owns the Cylinder
The key legal principle is that the owner of the cylinder is responsible for it and for any damage that it may cause to
any party.
Customer-Controlled Cylinder Model
When the cylinder belongs to the end-user, there are three main areas of responsibility and liability:
a. Liability for the quality of the cylinder over its lifetime. The party normally held responsible is the seller of the
cylinder. However, the seller of the cylinder has no control over how the cylinder is used (or abused)
afterward,
b. Liability linked to the conditions under which the cylinder is used over its lifetime. The party normally held
responsible is the end-user,
c. Liability linked to the filling of the cylinder with LP Gas over its lifetime. The party normally held responsible
is the supplier of the LP Gas. However, the supplier of the LP Gas may have no knowledge, or control, over
the quality of the cylinder’s manufacture or whether the cylinder conforms closely to its design specifications
(e.g., its safe filling capacity).
Having multiple parties who may be held responsible and liable for a given LP Gas incident (such as a fire or explosion)
means, in practice, that the burden will fall on the end-user. The gas supplier can easily blame the cylinder vendor,
and the cylinder vendor can easily blame the gas supplier. Thus, the end-user will have clear recourse neither to the
seller of the cylinder nor to the supplier of the LP Gas.
Because of this, the Customer-Controlled Cylinder Model fails to encourage all market participants to focus on, and
spend appropriate resources on, sustainable safe LP Gas and cylinder supply and distribution practices. This leads to
an increased risk of safety incidents2, despite the best intentions of all the parties.
When the cylinder is no longer required, the consumer may well throw it away. The cylinder may still contain LP Gas
and may cause an incident during its later disposal.
2
A common example is from over-filling the cylinder due to a lack of accurate and verified information available to the LP Gas
supplier about the cylinder’s tare weight.
The cylinder may also be reused by illegitimate competitors operating in the gray or black market for LP Gas, who are
likely to keep defective cylinders in the market (knowingly or unknowingly) long after they have become unsafe.
Marketer-Controlled Cylinder Model
On the contrary, when the cylinder is owned by the LP Gas marketer, responsibility and liability remain with the LP Gas
marketer. This encourages the LP Gas marketer to take appropriate measures to prevent potential accidents (fires
and explosions, etc.) and to ensure safety at every point during the lifecycle of the cylinder. LP Gas marketers who do
not ensure complete life-cycle cylinder safety can, and should, be subject to losing their Government-issued license to
operate and/or to governmentally-imposed financial or other penalties.
When a consumer no longer needs a given cylinder, he/she can return it to the LP Gas marketer’s authorised retail
point and receive back his/her deposit, or he/she can exchange it for another type or size of cylinder.
The Exception: Customer Ownership of Cylinders in the United States and Canada
In the United States and Canada, sufficient infrastructure, regulation and regulatory enforcement capability have been
put in place to permit the consumer to own his/her cylinder without significantly increasing the risk of market
dysfunction or safety incidents. In such cases, the consumer must be able to access—typically by automobile—and to
afford to pay a local authorised inspection centre for periodic inspection of the cylinder. If a defect is found, the
consumer must also be able to access authorised local facilities for repair or replacement of cylinders. For this market
model to continue to function well, there must very high confidence among consumers, Government, and all other
market participants in strict, vigorous enforcement of the regulations controlling cylinder safety.
These Guidelines do not recommend that countries with early-stage LP Gas markets attempt to copy the model used
in the United States and Canada.
Example: United States of America (USA)
The USA is one of the very few countries where the Consumer-Controlled Cylinder Model has been implemented
successfully and sustainably. The US Government’s Department of Transportation (DOT) is the primary regulator for
LP Gas.
DOT requires LP Gas suppliers to inspect cylinders before every refilling. The regulations also require inspection of LP
Gas cylinders within one year of the manufacture date. DOT regulations specify that cylinder inspections must be
carried out by individuals certified as trained in gas industry inspection. If inspectors find signs of dents, leaks or
corrosion, the cylinder cannot be reused until repaired and re-certified. LP Gas cylinders that pass inspection must
be labeled with a “retested” identification number and the date and year of inspection.
LP Gas cylinders indicating signs of corrosion, dents or leaks must be repaired if possible, according to industry
standards. DOT regulations require that cylinders that cannot be repaired must be scrapped according to DOT
specifications.
The freedom for an educated consumer to own an LP Gas cylinder can only be made possible by a series of legal
obligations requiring compliance from each participant in the LP Gas supply chain and authorized cylinder
recertification bodies. Even with these extensive controls in place, it is very difficult, in practice, to allocate
responsibility clearly for an incident that causes injury to the consumer or damages property.
On the other hand, if the cylinder is owned by the LP Gas marketer, all these issues are the LP Gas marketer’s
responsibility, and the LP Gas marketer is liable for any failures. This makes the implementation and enforcement of
safety regulations much simpler and easier: the LP Gas marketer is responsible and liable for safety.
Moreover, because these tasks are a cost-centre for the LP Gas marketer, rather than a profit-centre for an
independent inspection centre, the cost to the consumer is kept down.
To justify accepting that responsibility and liability, the LP Gas marketer must also have confidence that it will be able
to keep control over its population of cylinders in order to receive in full the economic benefits of maintaining and
refilling them over their entire lifecycles.
Examples of Countries Successfully Using the Marketer-Controlled Cylinder Model
Almost all countries where the market for LP Gas in cylinders has been developed successfully from early-stage to
mid-stage, and mid-stage to mature, have implemented the Marketer-Controlled Cylinder Model.
Examples include Turkey, India, Indonesia, Morocco, Tunisia, Argentina, Brazil, Chile, Mexico, and the countries of
Europe.
Example of Having to Transition from the Customer-Controlled to the Marketer-Controller Cylinder

Model: Colombia
Colombia recently abandoned the Consumer-Controlled Cylinder Model with generic (unbranded) cylinders, and put
in place new laws and regulations for the Marketer-Controlled Cylinder Model with branded cylinders owned by
licensed LP Gas marketers.
The case of Colombia shows clearly how a country utilizing the Customer-Controlled Cylinder Model experienced all
of its negative consequences and was forced to deal with serious safety issues affecting the public.
The Colombian authorities decided in 2007 to enact a new law, Law 1151 from 2007, “Por la cual se expide el Plan
Nacional de Desarrollo 2006-2010”, a wide-ranging set of regulations containing more than 50 resolutions. The new
law required a) a national cylinder distribution model conversion programme over three years; b) reform of the LP
Gas distribution chain, with fewer LP Gas marketers and fewer filling plants, so that the market would follow the
Marketer-Controlled Cylinder Model, and c) all remaining LP Gas marketers to be registered and to undertake to
replace five million generic cylinders with branded ones during the conversion period.
The core problem was summarised in the following governmental statements: “Five million generic cylinders with
no identified ownership. Parks of damaged cylinders. 120 filling plants operating without regulations and objectives.
Lack of standards and policies. Bad practices. Non-identifiable service providers. Unpredictable market with low
profitability. Unknown contractors, with no interest in delivering a safe, quality service. Lack of contracts. Unlawful
and illegal practices.”
Figure 3 Facilities of a Major Turkish LP Gas marketer with its own, Branded Cylinders
Example of the Customer-Controlled Cylinder Model Hampering Market Development: Haiti
Countries like Haiti recently realised that their current distribution model is hampering the development of the LP
Gas market. The Haitian model had been switched from the Marketer-Controlled Cylinder Model to the Customer-
Controlled Cylinder Model, with generic cylinders, inspired by the American (USA) model.
Compared with the US, Haiti has no chain of safety controls, limited governmental enforcement capability, no
cylinder recertification capabilities, and insufficient knowledge of LP Gas safety issues amongst end-users and the
media.
The American model transplanted to Haiti has been preventing the introduction of new cylinders in Haiti. The
Haitian governmental authorities are now reconsidering the choice of national model.
Key Lesson from Haiti’s Experience:
The choice of market model must match the capabilities, conditions and liability-culture of the country and its
institutions. Haiti, an early-stage LP Gas market, was not yet ready in its capabilities, conditions or liability-culture
to attempt the American model.
Other Countries
Countries like Ghana and the Dominican Republic are facing similar types of issues as a consequence of
implementing the Consumer-Controlled Cylinder Model.
LP Gas is often considered by developing countries as a transition fuel from kerosene or biomass toward natural gas
and electric power, especially renewable electric power. (The populations of the most-developed countries use mostly
natural gas or electricity for cooking.) It is in the nature of developing-country markets that infrastructure, strict local
regulation, and enforcement capability are not yet sufficient to support the Customer-Controlled Cylinder Model.
The good news for developing countries with early-stage LP Gas markets is that a well-implemented Marketer-
Controlled Cylinder Model, where the marketers invest in, own and are responsible for their cylinders and must invest
in the facilities to safely inspect, fill and maintain the cylinders, is a safe and cost-effective solution.
To emphasise the importance of removing damaged cylinders from the market, the following figures3 show a selection
of such condemned cylinders.
Figure 4 Examples of Condemned Cylinders Requiring Removal from the Market
3.2. The Implications of the Type and Location of Refilling Points: Centralised vs. Decentralised
Refilling facilities have a number of inherent safety risks that must be managed. Successfully managing them requires
three things:
4
1. Necessary and sufficient equipment for cylinder inspection, testing, filling, and vacuum-emptying and
refilling and/or valve-replacement, all in good operating condition,
2. Necessary and sufficient processes for inspection and testing of cylinders, filling of cylinders, and removal
of defective cylinders from the market, along with consistent quality control over these processes,
3. Necessary and sufficient training and supervision of on-site personnel for inspection, testing and filling of
cylinders, and for facility-level safety.
3
See http://www.propane101.com/photo_albums/DamagedPropaneCylinders/index.html (USA)
4
This includes in particular equipment to handle two dangerous safety situations: over-filled cylinders and valves that leak
after filling.
Worldwide experience teaches that the presence and adequacy of these three key requirements are easiest to ensure
and to enforce in larger, more centralised (or more centrally managed) facilities, and are more difficult to ensure and
to enforce in smaller, more decentralised (or more locally managed) facilities.
The relative centralisation of filling and the associated inspection of cylinders has been among the most successful and
impactful innovations in the field of LP Gas of the last half century.
By its definition, the Customer-Controlled Cylinder Model implies end-user access to a smaller, local, decentralised LP
Gas refilling dispensary, sometimes called a micro-center. Micro-centers are sometimes also found in markets with the
Marketer-Controlled Cylinder Model, although this is less common. In countries where LP Gas is used as an
automotive/transport fuel (called Autogas), decentralised dispensing directly into the fuel tanks of vehicles via petrol
(gasoline) stations is relatively common. However, decentralised Autogas dispensing can have many of the same
structural effects on early-stage LP Gas markets that decentralized cylinder refilling has. Autogas tends to be a major
component only of LP Gas markets that are mid-stage or mature.
The Long-Term Risks and Temporary Perceived Benefits of Decentralised Filling
For entrepreneurs seeking to participate in the LP Gas market as marketers with their own filling capability, the initial
outlay of capital for a small, decentralised filling facility is usually much smaller, on an absolute basis, than for a larger,
centralised filling facility5. This lower capital threshold per facility is therefore sometimes viewed as an advantage,
making it easier for new competitors to enter the LP Gas market during its earliest, formative stage.
As a consequence, early-stage LP Gas markets that self-evolve (based on the self-interest of the private sector
participants) sometimes have a large number of small, decentralised filling facilities and few, or no, larger-scale,
centralised facilities.
The lower up front capital cost for an entrepreneur to build a small, decentralised filling operation is often especially
attractive for new participants who wish to compete illegally by obtaining stolen cylinders, or by obtaining no
cylinders of their own but illegally refilling cylinders from other legitimate competitors.
During the very early phases of market development, if legitimate competitors invest both in filling facilities and LP
Gas cylinders, decentralising filling may result in a temporarily faster rate of consumer access to LP Gas.
World experience shows that, eventually, the risks of decentralised filling, which are explained below, come to
dominate over the perceived early advantages from increased competition (of the legal sort). They can lead to market
dysfunction, an end to investment in new cylinders by legitimate LP Gas marketers, and rapidly increasing risks to the
public of fires and explosions.
When an LP Gas market becomes mature, with strong laws and regulations that are well-enforced, world-class
business and safety practices followed consistently, and very small presence of gray or black market LP Gas
entrepreneurs (if any), the advantages of decentralised filling for certain niches in the market can outweigh the risks,
which have become much smaller as a result of the maturation of the market, the strengthening of its laws and
regulations, and the strengthening of governmental enforcement of laws and regulations.
Decentralised Filling Risks
A micro-centre typically consists of a) a stationary (non-mobile) tank where the LP Gas has been discharged by the LP
Gas supplier, and b) a pump to transfer the LP Gas (in liquid form) from the stationary tank into LP Gas cylinders with a
5
In aggregate across the market, the total capital cost per unit of LP Gas consumed is typically far higher for a national
network of decentralised filling facilities than for one which is centralised.
weigh scale to control the amount of refill. Any leakage of gas during the filling process will turn to vapor. Because LP
Gas vapor is heavier than air, the gas vapor will descend to the ground where it may be ignited by any local source of
ignition such as a source of heat (cigarette, heat from a car, etc.) or an electric spark or discharge (static electricity,
cellular phone, light-bulb/lamp, ignition system of a car, etc.).
Figure 5 Example of Cylinder-Filling in a Dangerous Decentralised Filling Centre
In this example, all safety rules are being disregarded. Especially dangerous is filling without using a weigh scale (i.e.,
filling according volume and not according to weight).
The fire can take place as far as 30 metres from the source of the LP Gas leak and will flash back to the source of the
leak. If the stationary LP Gas storage tank is engulfed in flames, there a strong possibility that a BLEVE6 will occur. A
BLEVE is potentially a major disaster that will claim lives, destroy property and result in the attention of media and
government on the LP Gas industry and on government regulators (whose duty was to prevent such a disaster, from
the view of the public and the media).
A BLEVE has the potential to destroy all property and cause fatalities within a radius of 100m to 300m.
6
BLEVE : Boiling Liquid Expanding Vapor Explosion
7
Figure 6 An Example of a Large BLEVE
Disaster Prevention: Government’s Regulatory Role
Government must put in place certain essential regulations to prevent the occurrence of a BLEVE disaster. This
includes:
 Setting and enforcing minimum safe separation distances between LP Gas facilities and LP Gas storage and
neighbouring structures and spaces,
 Prohibiting unauthorised access to the LP Gas storage tank,
 Imposing a requirement for fire-fighting systems, processes and personnel, including water sprays on the
tank capable of operating for at least two hours, in order to allow the fire department time to arrive and
intervene.
Decentralisation’s Cost to Society and its Cost to Government
World experience has shown that, particularly in early-stage markets in developing countries, the more decentralised
the national filling infrastructure, the higher the safety risk to the public, and the more difficult and costly the
challenge of regulatory enforcement by Government.
Accordingly, a decentralised national filling strategy, especially in a country which has not yet developed strict and
comprehensive LP Gas safety regulations and/or regulatory enforcement capability, will tend to lead to:
 An increase in the frequency of LP Gas fires and explosions (including BLEVE disasters) which damage
property and injure citizens,
 A significantly increased cost to Government of enforcing strict safety regulations across the larger number of
decentralized filling facilities,
 Both.
7
Source: KBS (2006)
In particular, the Customer-Controlled Cylinder Model, which can be implemented only through having a very large
number of micro-centre filling facilities located close to consumers, will result in a meaningfully increased risk to the
public.
For these reasons, the ADR rules, chapter P200 (see Appendices 1 and 2), specify that the refilling of cylinders must be
performed in a restricted area, not accessible to the public, and only by skilled staff.
The effect on industry-wide capital costs of the Marketer-Controlled Cylinder Model with centralised filling vs. the
Customer-Controlled Cylinder Model with decentralized filling can also be material. A rule of thumb is that a
centralised filling plant with 50,000 tonnes of capacity has a capital cost of around €7 million8; the capital cost for 500
decentralised facilities of 1,000 tonnes capacity each has a capital cost of around €12 million in aggregate.
In conclusion, it is recommended that in countries with early-stage LP Gas markets, Government define and cause the
implementation of the Marketer-Controlled Cylinder Model, through appropriate law and regulation and with
adequate regulatory enforcement, giving clear preference (through regulations and through licensing and permitting)
to centralisation of filling facilities and limiting the decentralisation of filling facilities.
Figure 7 A Decentralised Filling Micro-Centre, Open to the Public, where no Safety Rules can be Ensured or Enforced
8
As estimated by the WLPGA as of the publication date of these Guidelines
Example: United States of America (USA)
In the USA, Federal Government regulations for dispensing and refilling propane tanks are set by the National Fire
Protection Agency (NFPA), the Department of Transportation (DOT) and the Occupational Safety and Health
Administration (OSHA).
The NFPA requires documented training for anyone who dispenses propane on propane handling procedures, with
refresher training every three years. DOT hazardous materials (HAZMAT) training complies with this standard, as
does the National Propane Gas Association's Certified Employee Training Program (CETP) and the GAS Check training
program. Certain other programs in the USA on safe propane handling procedures also may meet this requirement.
The USA is perhaps the only country in the world where governmental authorities are involved in-between the
customer (who is the cylinder owner in the USA’s model) and the LP Gas supplier with respect to cylinder safety.
In the vast majority of other countries, the LP Gas marketer is responsible under the law for ensuring public and
consumer safety, because the LP Gas marketer is the owner the cylinder. The LP Gas marketer is incentivised to focus
on ensuring safety not only because it bears liability for gas safety incidents under the law and regulation, but also
because its brand and company reputation are at stake if such incidents should ever occur with its branded cylinders.
3.3. How the Marketer-Controlled Cylinder Distribution Model Encourages Expanded Cylinder
and Infrastructure Investment and LP Gas Supply
This section discusses how investment in LP Gas cylinders and LP Gas facilities must be coordinated if the market is to
grow sustainably, and how the choice of market model leads to coordinated investment or a lack of coordinated
investment.
The “Who Invests First” Problem and How to Solve It
Many developing countries have built up their LP Gas infrastructure of LP Gas import terminals, LP Gas depots and LP
Gas filling plants through a mix of private sector and public sector investment and then waited for the private sector
to provide large quantities of LP Gas cylinders to the market in order to utilise this expensive new national
infrastructure. But in many of these cases, the private sector never did so.
The most powerful cause of lack of follow-on investment in cylinders is the absence of a uniform, nationally
implemented Marketer-Controlled Cylinder Model for the country’s LP Gas market. (Many additional causes for lack
of cylinder investment can nonetheless apply if the Marketer-Controlled Cylinder Model is implemented incompletely
or inconsistently. These additional causes are discussed later in this document.)
Previous sections of these Guidelines explained why the Customer-Controlled Cylinder Model may create growth in
the LP Gas market during its very early stages but will tend to end in stagnation or shrinkage of the LP Gas market
later.
Under this model, LP Gas marketers are usually not the actors that bring cylinders to market. Instead, independent
gas appliance companies, or dedicated cylinder manufacturers, sell empty cylinders to consumers, either directly or
through retail outlets. The consumer is then responsible to have the cylinder filled. Typically, the filling occurs in a
small-scale filling facility located near to the consumer. In some cases, the consumer’s first cylinder is purchased pre-
filled, and the consumer starts utilising the services of a filling facility with his/her first refill.
Under these conditions, LP Gas marketers have no incentive to supply their own cylinders, because once a cylinder
enters the market, it can be refilled by any competitor. The lifecycle profits from that cylinder are as likely to go to
competitors as to the LP Gas marketer who placed the cylinder into the market.
The LP Gas marketers also cannot compete on the quality, safety, sizes or brand of their cylinders, the honesty of their
filling (that is, on customers receiving what they pay for), the strength of their retail networks, customer brand loyalty,
and so on. They can compete only on price (where price is unregulated).
It is essential for any investor to be able to define with high certainty his/her business plan, competitive position,
operational expenditure and capital expenditure, and to have good control of profitability and cash flows over time.
The foregoing factors create much greater uncertainty for any investor, and that leads directly to less investment
occurring.
This added level of uncertainty typically results in a wait-and-see situation, under which the LP Gas marketers wait to
invest in expanding their filling facilities and distribution networks and to commit to gas supply contracts (from
refineries or importers, for example) until after the appliance companies invest in cylinders and sell them to the
public. However, the appliance companies wait to invest in making (or importing) new cylinders until after the LP Gas
marketers obtain added LP Gas supply from reliable sources and invest in expanded infrastructure and distribution
networks.
The exception is when a national monopoly invests, such as Pertamina in Indonesia as a part of that country’s
government-mandated national LP Gas transition programme.
By mandating that LP Gas marketers invest in and own all cylinders placed in the market, the “who invests first?” issue
is avoided. When owning their own, branded cylinders, supported by adequate regulations and regulatory
enforcement by Government, the LP Gas marketers have enough certainty about their business plans, future profits
and cash flows, that they can justify investing in cylinders together with LP Gas infrastructure and distribution
networks and committing to LP Gas supply contracts.
In this way, the Marketer-Controlled Cylinder Model pushes the pace of LP Gas cylinder and infrastructure investment
nationally.
Unblocking Consumer Demand for LP Gas, to Expand Affordable Access to More People
The Marketer-Controlled Cylinder Model also expands the rate at which consumer demand for LP Gas can grow and
be satisfied. In that model, the consumer’s cost to obtain a cylinder is very often lower than in the Consumer-
Controlled Cylinder Model. Under the Consumer-Controlled Cylinder Model, the cylinder retailer needs to make a
profit by selling the cylinder to the consumer at a mark-up above its cost, but under the Marketer-Controlled Cylinder
Model, the LP Gas marketer needs only to make a profit from the LP Gas; therefore, the LP Gas marketer can justify
collecting a deposit amount from the consumer that is at—or below—the cylinder’s cost. By requiring less cash from
the consumer for the cylinder, the Marketer-Controlled Cylinder Model makes it easier for more households and
businesses to be able to afford switching to LP Gas from other, less healthy and/or more environmentally harmful
fuels. Lower deposit amounts are also an additional way in which LP Gas marketers can compete to earn customers.
How the Choice of Market Model Can Improve Distribution Efficiency, Expand Geographic LP Gas Access
and Create Jobs
Under the Marketer-Controlled Cylinder Model, the LP Gas marketer not only has a greater incentive to invest in
cylinders and facilities than under the Customer-Controlled Cylinder Model, in part because the LP Gas marketer will
have greater control over marketing: branding, positioning, sizes of cylinder offered, type of valves, etc.
The LP Gas marketer can also optimise its operational costs better: at the filling plant (through standardising cylinder
sizes), deploying common sizes and types of racks for cylinder storage, and deploying common display racks in the
network of retail outlets.
The LP Gas marketer will also have greater control of the monitoring and the efficiency of its distribution network’s
personnel. All of these advantages contribute, in practice, to stronger, more efficient competitors who are better able
to expand, to survive in the market on a commercial basis, to provide the required financial returns to investors, and
to serve the public.
The last point—that the LP Gas marketer can exercise greater control over the monitoring and the efficiency of its
distribution network’s personnel under the Marketer-Controlled Cylinder Model—is very important. LP Gas marketers
can, and should, develop networks of exclusive distributors who transport their cylinders to and from retail outlets
located very close to the homes or businesses of the consumer, or transport cylinders directly to and from consumers’
homes and businesses. Countries which successfully develop their LP Gas markets from early-stage to mid-stage
consistently evidence dense, extensive distribution networks that efficiently provide access to LP Gas to large portions
of the population and which create large numbers of jobs and support large numbers of distribution entrepreneurs.
Limiting LP Gas Supply to Licensed LP Gas Marketers
Among the most important steps Government can take to ensure the success of any market model is to legally limit
access to LP Gas supply to legitimate, licensed LP Gas marketers and to enforce that limitation rigorously.
One of the key themes of this document is the worldwide lesson, reinforced over many decades of successful and
failed experimentation, that for early-stage LP Gas markets to flourish, cylinder ownership, associated lifecycle filling
and refilling profit, associated cylinder and infrastructure investment, and responsibility and liability for safety, must
all be combined and concentrated in LP Gas marketer companies under a well-defined set of rules and regulations
established by, and adequately enforced by, Government.
Those market-defining rules and regulations, when followed by the market participants and enforced by Government,
ensure that grey or black markets and other bad behaviors and conditions do not arise and expand to the point that
public safety is at severe risk, that the market becomes dysfunctional, and that investment in new cylinders declines
or ceases.
The last key element of these rules and regulations is a legal limit on what entities can legally obtain LP Gas supply.
To ensure that LP Gas marketers’ investment in cylinders and infrastructure will be sufficiently protected that the
investment will be made, and that LP Gas supply contracts will be undertaken, access to LP Gas supply must be legally
restricted to licensed, compliant LP Gas marketers. This means that only licensed, compliant LP Gas marketers are
entitled to obtain LP gas in bulk, whether by importing it or by purchasing it from domestic oil refineries or domestic
natural gas production facilities. Only licensed, compliant LP Gas marketers may be allowed to resell LP Gas in bulk to
the other licensed, compliant LP Gas marketers.
When illegitimate competitors are allowed to obtain LP Gas, it facilitates their entry into the market and the
expansion of their activities, and that entry and expansion lead step by step to the many destructive consequences for
the market described throughout this document.
Chapter Four
Implementing the Marketer-Controlled Cylinder Distribution

Model
The previous Chapter explains the benefits of the Marketer-Controlled Cylinder Model for developing a large and
commercially sustainable national market for LP Gas, in which a large portion of the public has access to, and uses, LP
Gas for cooking and other energy needs. This model has been established and proved successful over many decades in
a large number of countries.
The Marketer-Controlled Cylinder Model is sometimes called the “By Deposit” Distribution Model or the “Cylinder
Recirculation Model”. Both aspects—how the economics of cylinders work, and how cylinders move through the
market as they are inspected, refilled, repaired and scrapped—are important to the widespread and lasting success of
the model. (The third critical element is Government’s role in enacting necessary and sufficient laws and regulations
and rigorously enforcing them.)
Because cylinders are “mobile” assets, over which it is relatively easy to lose control, cylinder investors must have high
confidence that their cylinders will return for regular refilling across their entire lifetimes. Otherwise, investors cannot
justify making cylinder investments, and the LP Gas market will fail to develop and grow.
Creating confidence in the private sector market participants that the cylinders in which they invest will not be lost is
done through two policies, working together.
1. The first policy is a refundable deposit scheme. This scheme binds all the participants in the cylinder chain,
from investor to end-user, together financially. A deposit is paid to the LP Gas marketer by each of its
authorized distributors, and by each of its retailers (where they are involved) to the distributor, and by each
of the end-user consumers to the retailer/distributor, upon first obtaining a cylinder.
The LP Gas marketer pursues this policy throughout its distribution network: from distributor to retail outlet
to consumer and, if applicable, from its own distribution staff directly to the consumer, according to the LP
Gas marketer’s business plan in a given country or region. The amount of the deposit may be set at the LP
Gas marketer’s discretion and is usually set below the cost of the cylinder. The reasons why the deposit
amount is normally set below the cylinder’s cost are given in Section 3.3 above,
2. The second policy is that governmental authorities must actively police the LP Gas sector to prohibit the
illegal taking of the cylinder or its contents, both of which result in a loss of the LP Gas marketer’s rightful
revenue stream from some or all future LP Gas refills of the cylinder (thought illegal filling by a competitor,
siphoning, etc.).
That is, there are two kinds of loss—loss of the cylinder asset, and loss of the future cash flow from the asset. (Of
course, loss of the asset automatically means loss of the future cash flow.) Both kinds of loss must be protected
against, or there will be no incentive for the private sector to invest in more cylinders. There are two protections: the
financial entanglement of the distribution chain and end user in the cylinder’s value, through their deposits, and
effective enforcement efforts by governmental authorities to stop illegal practices like cylinder piracy.
4.1. Identifying Cylinder Ownership in a Refundable Deposit Chain
The cylinder’s owner must be identified by branding elements such as a distinctive stamp and/or brand embossing,
colour and logo, with specific procedures for registration of these elements with Government to ensure all
competitors are in compliance with the country’s competition laws.
An LP Gas marketer may have multiple registered brands and colours of cylinders.
The legal title to the cylinder, as property, is vested only in the physical asset, not in the brand. This means that if an
LP Gas marketer sells some or all of its existing cylinders to another LP Gas marketer, the second LP Gas marketer does
not become the owner of the first’s brand, but only the owner of the physical assets that were transferred.
As an element of the Marketer-Controlled Cylinder Model, the refundable deposit scheme requires that the supply
and resupply of LP Gas in cylinders to end users only happens by the end user exchanging an empty cylinder for a filled
cylinder of the same registered brand.
Under this model, it is compulsory that the LP Gas marketer removes any defective or otherwise dangerous cylinder
from its distribution chain and replaces it immediately with a new cylinder, without requiring any additional money
from the distributor, retailer, or consumer. Having paid their deposits, they are always entitled to have a
corresponding quantity of cylinders that are in good, safe condition.
Upon returning their cylinder(s), they are also entitled to receive back their deposit immediately. In this way, a
dissatisfied customer, retailer or distributor can immediately take his/her business to an LP Gas marketer (and its
distribution and retail network) that is more likely to satisfy, without any penalty.
4.2. Legally Restricting Cylinder Refilling to the Brand-Owning LP Gas Marketer
Limitation on Cylinder Refilling Rights
Under the Marketer-Controlled Cylinder Model, a given LP Gas marketer’s cylinders can only be refilled by that same
LP Gas marketer.
The refilling of competitors’ cylinders must be illegal. (Accordingly, Government must enact appropriate laws and
regulations that make this practice illegal.)
The LP Gas marketer can subcontract its cylinders’ refilling, but only to another licensed LP Gas marketer. LP Gas
marketers may not refill cylinders from any third party, except from another licensed LP Gas marketer under a
Government-approved subcontract.
Limitation on Owning and Operating Filling Facilities
Further, only a licensed LP Gas marketer, having invested in standards-compliant cylinders, is legally authorised to
have and operate a cylinder filling facility.
However, a legitimate exception is that an LP Gas marketer may, in addition or instead, have a cylinder filling contract
with a competitor (also a licensed LP Gas marketer) who has a filling plant. By permitting subcontracted filling among
licensed LP Gas marketers, it helps new, legitimate competitors enter the LP Gas market without having to make as
large an investment. This can be particularly helpful for accelerating the growth of the LP Gas market at its earliest
stages of development without sacrificing public safety and without unintentionally encouraging grey and black
market activities.
Advantages of Sharing Filling Infrastructure among LP Gas Marketers
Sharing operation and/or investment in filling facilities provides a number of advantages to legitimate market
participants, particularly during the first several years of transition from early-stage to mid-stage market. Among these
advantages are:
 Sharing/spreading commercial risks,
 Accessing jointly geographic areas where it would be financially risky for a single LP Gas marketer to invest in
facilities or distribution networks alone,
 Reducing commercial barriers to geographic expansion for distributors in order to increase access to LP Gas in
areas with poor penetration of LP Gas,
 Optimising capital expenditures,
 Reducing logistics and filling costs for the benefit of the consumer,
 Facilitating growth in capital expenditures for cylinders whilst simultaneously reducing the capital
expenditure required for filling the cylinders,
 Reducing the risk that illegal cross-filling occurs.
Filling as a Public Utility or Asset Pool
A practice followed successfully in a number of countries across all market stages (early, mid, and mature) is
outsourcing filling by the LP Gas marketers to a public utility (or an industry-wide filling facility asset pool). The utility,
or pool, operates as a cost center or (if investor-owned) on a cost-plus-minimum-fixed-return basis.
This can create very high efficiency in the use of capital for national LP gas infrastructure, because there is no wasteful
duplication or under-utilisation of filling facilities, and economies of scale can be realized more quickly and easily.
Regulations regarding filling and access to LP Gas are also easier for Government to enforce, because LP Gas supply
and filling are concentrated in the public utility entity or in the pool.
The benefits of the resulting cost reductions can then be shared by the other market participants, including the end-
user customer.
Burkina Faso is a good example of this approach.
4.3. Licensing the LP Gas Marketer
Licensing of marketers, with ongoing compliance and renewal requirements, is one of the main tools for Government
to define clearly the responsibilities and liabilities of the LP Gas marketers. Licensing can be considered as issuing a
“permit to operate”.
By issuing licenses, national regulatory bodies are in a position to enforce essential regulations against an annual work
programme.
Example: Japan
In Japan, the licensing of LP Gas distribution companies requires an assessment of the capabilities of such candidates
by the governmentally-authorised licensing authority before a license is granted. A specific body (a third party
organisation) was established by law to ensure safety and to prevent accidents and disasters caused by LP Gas from
taking place. This Japanese safety body is responsible for:
 Study, investigation and education on the safety of LP Gas in general,
 Testing all candidates for licenses to ensure that they have sufficient knowledge for the type of license desired.
Such tests cover LP Gas operations, including technical aspects and legal aspects (laws, decrees, norms and
standards). Only candidates passing these tests can become licensed.
There are three classes of licences, “A” level, “B” level and “C” level. An “A” level license requires the highest
technical knowledge. The roles and responsibilities accessible to candidates desiring to operate LP Gas terminal
facilities and filling plants depend on the level of license the candidates are able to obtain, and their demonstrated
level of experience in safely handling LP Gas.
For selling LP Gas to household users, the safety body tests the candidates’ knowledge on the relevant subjects and
grants licenses to those who achieve a passing score.
The safety body also performs examinations and inspections of safety operations, including inspection of documents
for permits to construct LP Gas terminals, filling plants and other facilities where LP Gas is handled. After such
documents are approved, construction can be started. Before the facilities may start operations, the construction
details are compared with the approved construction documents for compliance. If the construction details conform
to the document, the facilities are then approved to begin handling LP Gas.
The Commission may organise this “knowledge validation” function directly, or may outsource it.
Examples: Turkey
The case of Turkey is noteworthy, as Turkey has enacted a very comprehensive body of regulation concerning the
distribution of LP Gas. These regulations state that in order to obtain an LP Gas marketer’s license, prospective
companies are obliged to meet the following key requirements (among others):
 The marketer must possess its own LP Gas cylinders, LP Gas filling facilities and LP Gas storage facilities,
compliant with the required technical configurations and standards,
 The marketer should have at least two filling facilities,
 In order to be permitted to operate in the large Turkish Autogas market (LP Gas for powering automobiles,
dispensed through petrol/gasoline stations), the marketer should also be operating in the LP Gas cylinder
market,
 The marketer must store and possess at least twenty times the average daily amount of LP Gas that it supplies
to its dealer stores. It is forbidden for the marketer to supply LP Gas to another company’s dealer store,
 The marketer must submit a one-year sales forecast report every February to the Energy Market Regulation
Association (EMRA). The marketer is also obliged to report its actual sales against its forecast every quarter to
the EMRA,
 The marketer is obliged to train its distributors/dealers and delivery personnel and educate its customers.
The Energy Market Regulation Association plays a key role in monitoring the proper functioning of the LP Gas
market, participants’ compliance with the national LP Gas regulations, and the enforcement of the licenses.
Kenya
Kenya has a similar body to the Turkish EMRA, the Kenya Energy Regulatory Commission (ERC), which has regulatory
authority over all energies (not just LP Gas). As the first edition of these Guidelines were being finalised, the ERC was
in process of recruiting one or more qualified private sector parties to expand the ERC’s reach and capabilities in
monitoring and enforcing regulatory compliance throughout the Kenyan LP Gas market.
Regulatory Alternatives to Using Licenses as a Rule-Setting and Enforcement Tool
Many countries—particularly developed countries with mature LP Gas markets, such as the EU countries—do not use
licensing as a key rule-setting and enforcement tool. Instead, licensing is replaced by many other regulations. These
include: registering with a governmental agency for a specific industry sector; VAT registration; obtaining safety and
environmental permits to store LP Gas (as under the Seveso I and II rules—see glossary); implementing an emergency
plan with and for the local authorities; obtaining safety permits to operate a filling plant; obtaining a hazardous
materials (HazMat) permit to transport LP Gas with yearly re-certification of the LP Gas tanker drivers; reporting on all
hydro-tested, repaired and scrapped cylinders; and many others. Regarding these countries, the objective from the
governments’ perspective is to ensure that only properly skilled marketers are in control of their public liabilities
regarding safety.
For early-stage LP Gas markets, these extensive regulations and permitting requirements often do not yet exist. The
simpler approach for countries with early-stage LP Gas markets a for Government to enact a separate body of
essential regulations, rigorously and consistently enforced, that ensure that a well-ordered LP Gas market develops
and remains sufficiently under control as it grows so that it can reach the mid-stage and, later, maturity.
4.4. Risks from Permitting Consumer Exchanges among Competitors’ Cylinders and LP Gas
Marketer Collection of Competitors’ Cylinders
LP Gas companies (legitimate and illegitimate) must be legally prohibited from taking or altering in any way a
competing LP Gas marketer’s cylinders. Such a practice is a form of “loss” of the cylinder and related income to the LP
Gas marketer that originally invested in the cylinder, and if the practice is permitted to emerge, legitimate LP Gas
marketers will be unable to justify continued cylinder investment.
It is not recommended that Government allow competitors to accept from a customer a cylinder of competitive
“Brand A” from a customer and replace it with their own cylinder of “Brand B”. (Some countries which experience
severe LP Gas shortages have permitted such cross-brand exchanges in order to help consumers obtain LP Gas from a
second LP Gas marketer, if their usual supplier temporarily runs out of gas, without having to pay a second cylinder
deposit to the second LP Gas marketer.)
However, if Government does permit such exchanges of cylinders, the regulations must prevent any one LP Gas
marketer from holding back from the market any competitors’ cylinders which it obtained through customers’
exchanges.
Some countries have experienced this situation, sometimes called “competitive cylinder hoarding”, and it is the
consumer who is ultimately harmed by it as the LP Gas market develops over time, because it leads to widespread
cylinder shortages. Because of the resulting cylinder shortages, even when LP Gas is abundant, customers cannot
obtain LP Gas because there are no longer enough cylinders left in circulation. Cylinders collected from rivals’
customers are hoarded, or destroyed, in ever greater quantities, as a way for the competitors to shrink their rivals’
share of the cylinder market.
Example: Brazil
The case of Brazil is well known in the global LP Gas industry. Brazil had to change its laws in order to replace a
dysfunctional LP Gas market model. Brazil originally implemented the Consumer-Controlled Cylinder Model with
generic (unbranded) cylinders, with swapping of empty cylinders permitted at dedicated exchange centers.
New regulations were enacted in the 1990s that redesigned and rebuilt the LP Gas distribution chain, newly licensed
the country’s LP Gas marketers, and shut down illegal LP gas dealers and refillers, under a general agreement
between the government and the country’s legitimate LP Gas marketers. Cylinder exchange remained permitted
under very strict, well-enforced rules.
83 million generic 13 kg cylinders were recertified, repaired and converted from generic to branded cylinders, from
1997 to 2009, and 17 million 13 kg cylinders were removed from the market and scrapped. A specific organisation
was set up to ensure enforcement of the new regulations and training of personnel throughout the distribution
system.
4.5. Implementing the LP Gas Distribution Chain
In a well-ordered LP Gas market with a good market model defined in law, with all appropriate rules well-enforced by
Government, LP Gas marketers will establish optimised distribution chains to provide maximum access to LP Gas
cylinders for consumers, according to consumers’ needs.
These distribution chains may be implemented through independent exclusive distributors appointed by the LP Gas
marketer (Authorised Distributors) to serve the Authoriser Distributors’ network of retail outlets, or by performing
direct delivery to the consumers’ homes and businesses, or a combination of these.
In all cases, any distribution system must ensure that the requirements defined throughout these Guidelines are met.
Each LP Gas marketer must ensure, via its contracts with its distributors, that its distributors follow the rules.
The retail outlets need not necessarily be limited to selling only one LP Gas marketer’s cylinders, as long as all the
rules are followed in respect of the assets (cylinders) belonging to each LP Gas marketer.
Training, certification, and periodic retraining and recertification of distribution network personnel is a key part of
implementation and should be a requirement of LP Gas marketers’ licenses.
It is the distribution network, connecting filling plants and consumers, which is the heart of competition in a well-
functioning, sustainable LP Gas market, whether small or large, early-stage, mid-stage or mature.
Intensive competition in this part of the overall LP Gas market drives ever-increasing distribution productivity, which
helps keeps LP Gas affordable.
It is therefore important that all the participants at this level—Authorised Distributors, drivers, retail outlet
attendants, and so on—understand and follow the principles of the Marketer-Controlled Cylinder Distribution Model.
In particular, they must be required to comply with the principle of property rights in the branded cylinder—including
the right to obtain the refilling revenue over its lifecycle—being vested in the LP Gas marketer that invested in the
cylinder.
Figure 8 Turkey: Example of an LP Gas Marketer’s Branded Outlet
4.6. Enforcing the Rules across the Distribution Chain
The recommended first step toward effective enforcement of the rules, and thus the preferred distribution model, is
entry of distributors and delivery trucks on a national register.
Similarly, registration of the retail outlets and of transport vehicles (trucks) enables enforcement at these locations.
Government (or its agents, under Government’s control and supervision) must inspect the distribution chain—
including both facilities and vehicles—to identify unregistered participants and shut them down and/or penalise the
perpetrators to the full extent of the law, and to identify and penalise registered participants and/or shut down their
activities or assets when they violate the rules.
Inspection should be carried out proactively, and also in prompt response to reports from any market participant, or
from the public, of improper activities.
Figure 9 An LP Gas Registered Distributor’s Trucks in Brazil
4.7. Optimising the Investment in Primary LP Gas Infrastructure and Enforcing Competition in
the Distribution Chain
The ownership of primary LP Gas infrastructure, such as import terminals, bulk depots and filling plants, must be
restricted to licensed, compliant LP Gas Marketers or shared among them, partially or wholly.
Sharing or pooling such assets, or providing them to all licensed LP Gas marketers on a public utility basis, can reduce
distribution costs, reduce overall private sector expenditure on assets, accelerate the realisation of economies of scale
for the entire market, and focus the LP Gas marketers on efficient distribution to the customer rather than on
ensuring stable and affordable primary LP Gas supply.
Such joint ventures for infrastructure sharing have resulted in very efficient development of cylinder markets in a
number of countries, and they remain in use even among the world’s most mature markets.
Newly-licensed LP Gas marketers—that is, newcomers into the market—do not necessarily need or desire to invest in
LP Gas import terminal facilities, bulk depots and filling plants, as long as the country’s laws and regulations allow
them to contract out their infrastructure needs to other licensed LP Gas marketers, LP Gas infrastructure pools, or an
LP Gas public utility providing shared access to common infrastructure on a tariff basis.
Shared access to primary infrastructure, complying with national competition laws, lowers the barriers to entry into
the market for new competitors. Robust competition that is focused on distribution and on brand qualities (service,
delivering good value, integrity, etc.), rather than on supply logistics and filling, can strengthen the distribution
system, expand access to LP Gas to more customers and reduce costs (keeping LP Gas more affordable).
4.8. Requirements for Access to LP Gas in Bulk
The purchase or off-take of LP Gas in bulk from refineries, import terminals or the bulk facilities of LP Gas marketers
requires strict governmental oversight regarding the safety of both the bulk storage facilities and the carriage
(transport) in bulk of the LP Gas. In turn, this requires registration and licensing of LP Gas bulk storage depots, with
the following conditions imposed:
 The off-taker must own a depot of a minimum required capacity; forty (40) tonnes of storage capacity is
recommended,
 The off-taker must obtain adequate Insurance coverage,
 Because movement of LP Gas in its liquid phase is hazardous, any such depot must be registered with the
Government prior to any physical off-take of LP Gas occurring,
 The depot must comply with a set of strict safety requirements, including adhering to minimum safety
distances from other structures and from the public; having fire prevention systems (including gas and flame
detectors and an emergency shutdown system); having firefighting systems such as water sprayers (with two-
hour capacity) and fire extinguishers; having an effective emergency plan; having and following procedures
for regular fire safety drills and systems tests; and having properly trained, qualified staff,
 Road tankers must comply with all safety standards regarding the transportation of LP Gas in bulk, as
specified in the ADR rules (see Glossary and Appendix 2). Road tankers must be registered with the
Government annually,
 Prior to any off-take, road tanker operators must show documentation proving valid, current registration
prior to any off-take, and the LP Gas storage tank and LP Gas accessories must pass a safety inspection,
 At every off-take, the road tanker driver must show documentation proving s/he has a valid, current
certificate of training in transporting LP Gas in bulk. Driver training must be repeated and certification
renewed annually,
 Off-taking must occur in one continuous transfer, with immediate departure by the road tanker upon fill-up,
so that the road tanker’s engine never idles adjacent to LP Gas bulk storage,
 The off-taker must have all necessary safety-related devices and equipment to respond in the event of any
accident involving its truck. In particular, the off-taker must be able to vacuum safely and completely the
truck’s LP Gas tank of all contents and to deal with any and all injuries related to road accidents and LP Gas
accidents,
 Road tanker operators must demonstrate capability to comply, and a record of continuous compliance, with
all applicable road safety rules and regulations and LP Gas safety rules and regulations.
Import Requirements for LP Gas Marketers
Quantities imported should be matched to what is required for the LP Gas marketers to fill the inventory of cylinders
they own. Arrangements can be permitted between LP Gas marketers for sharing their importation rights. (This is
especially applicable when primary LP Gas infrastructure in a country is shared through a pool, multi-marketer joint
venture, or LP Gas public utility, for reasons explained in the preceding section of these Guidelines.)
An annual application form to declare annual importation requirements must be registered with the Government by
each LP Gas marketer, prior to its import of LP Gas.
Each import must have an attached Certificate of Quality provided by an authorised Governmental body.
A Special Case: Bulk Importers that Own LP Gas Storage but not Cylinders
Some countries have state-owned enterprises (SOEs), or certain authorised private sector companies, that import and
store LP Gas in bulk and then resell it to domestic LP Gas marketers without also investing in and owning cylinders.
More often than not, this variation on the Marketer-Controlled Cylinder Model works as intended, although it adds an
extra profit center into the LP Gas supply chain.
The importer must comply with laws and regulations specific to its function in the supply chain.
A key objective is for Government to ensure that access to LP Gas in bulk is limited to licensed LP Gas marketers, for
the reasons explained in Section 3.3 above.
This importer-oriented variation on the common Marketer-Controlled Cylinder Model must be done with care, as
explained below.
Implications of Vertical Integration along the LP Gas Supply Chain
Companies’ vertical integration across the wholesale, supply and bulk layers of the LP Gas supply chain, when access
to LP Gas is legally restricted to the LP Gas marketer, has contributed to successful development and growth of the LP
Gas markets in many countries.
Governmental licensing of a pure, for-profit wholesaler to import LP Gas can introduce an extra risk into the
development of the LP Gas market. It enables the importer to extract additional rents from the LP Gas market
without making any corresponding investment in the complex system for cylinder distribution. If the importer is able
(whether legally or illegally) to sell LP Gas to unauthorised parties, or to trade it internationally in order to benefit
from geographic price arbitrage, it can contribute to uncertainty about future market conditions, the breakdown of
the orderly and stable flows of LP Gas to consumers, and the orderly and stable flows of refill income to the LP Gas
Marketers who invest in the cylinders. All of these situations must be prevented for an LP Gas market to develop and
grow from early-stage to mid-stage and beyond.
Integrating the bulk sector of the industry as a cost to the distribution sector, as opposed to a profit centre, enables an
efficiently organised supply system and the end result is lower costs.
Example: Morocco
In Morocco, only the national refinery and LP Gas marketers that own or share filling facilities are permitted to
import LP Gas. Those LP Gas marketers that do not own a filling facility have the right, by law, to outsource refilling
of their cylinders to another LP Gas marketer.
LP Gas marketers have also formed shared filling companies that may perform the filling function on an outsourced
basis for any licensed LP Gas marketer. Such filling entities are not themselves LP Gas marketers. A LP Gas marketer
served by a shared filling company receives a monthly invoice from the shared filling company and avoids the risk of
cross-filling. An example of a shared filling company is SALAMGAZ, whose ownership is shared among the refinery
and three LP Gas marketers. SALAMGAZ imports, stores and transports LP Gas, which in bulk it may sell only to other
licensed LP Gas marketers, and it owns and operates 12 filling plants with a combined filling capacity of about
800,000 tonnes per year, with which it refills cylinders for other licensed LP Gas marketers.
Because LP Gas marketers in Morocco claim a governmental subsidy on LP Gas cylinder sales after the fact, they are
obliged to produce a periodic report to the government stating the filling they have performed for each of the other
LP Gas marketers. That report is subject to governmental audit and approval on a monthly basis.
4.9. LP Gas Industry Associations
National, regional and/or multi-national LP Gas industry associations are a common feature of LP Gas markets
worldwide. They can and do play an important role in representing the interests and perspectives of industry in
discussions with Government, particularly in the field of improving safety, improving the national Safety Regulations
and drawing attention to enforcement of the LP Gas Distribution Regulations.
They may also produce standards and codes of practice in a market which has developed sufficiently that a certain
level of self-regulation can begin to supplement governmental regulation effectively.
The WLPGA provides various forms of assistance to such LP Gas industry associations that become members of the
WLPGA.
Chapter Five
Enacting a Specific Set of Regulations to Support and Enforce

the Best-Practice Market and Distribution Model
This chapter recommends a set of self-consistent regulatory requirements for the distribution of LP Gas in cylinders
that enable implementation by Government (together with key stakeholders) and enforcement by Government of the
Marketer-Controlled Cylinder Model on a sufficiently complete, thorough basis to grow the LP gas market effectively
and sustainably from early-stage to mid-stage.
Any company considering entry into an LP Gas market will consider the regulatory framework and the level of
enforcement effectiveness as key factors in its investment decision. It is only in a well-designed, well-regulated
market, where a high level of safety is assured and the cylinder assets (and associated cash flows) can be well-
controlled and predicted, that significant new investment in LP Gas infrastructure (including cylinders) and distribution
networks can be commercially justified.
Defining the market model and its cylinder distribution model requires defining, up front:
1. The main market participants across the supply/distribution chain,
2. Their rights, responsibilities and liability,

3. The mode and terms of licensing for every participant,
4. The market-wide system of controls, enforcement and sanctions.
Government Should Enact a Separate Set of Laws and Regulations Covering the National LP Gas Cylinder
Distribution Chain
A country may already have enacted certain laws to promote the safety of LP Gas within a general “National Safety
Act” or the equivalent. Even so, it is recommended that Government enact a separate set of regulations covering the
entire cylinder distribution chain, including (but not limited to) safety; technical norms and construction standards;
safety procedures for cylinders and their filling; standards and safety requirements for stationary tanks, LP Gas depots,
filling plants and road tankers.
If Applicable, Government Should Enact a Separate Set of Price-Related Regulations
If LP Gas retail prices are set and regulated by Government, it is further recommended that the price-related rules
form a separate set of regulations. It is important that the safety and distribution regulations covering the LP Gas
distribution chain remain in place continually, whereas pricing regulations may require frequent amendment.
5.1. The Process prior to Introduction of Additional Cylinders into the Market
Regulating Imports and Local Production of LP Gas Cylinders
In order to ensure acceptable levels of quality and safety of LP Gas cylinders and sufficient control of compliance with
national standards and safety norms, only licensed LP Gas marketers should be legally permitted to obtain cylinders.
The procedure for importing LP Gas cylinders and for purchasing locally manufactured cylinders should include an
annual application and physical control and registration of cylinders prior to their release into the market. The
application must detail the different formats and sizes of cylinders and all their technical details to ensure compliance
with safety regulations.
Governmental inspection (which may be carried out by a qualified, contracted third party accountable to
Government) must cover at least the following cylinder attributes: embossed or stamped brand identification,
registered colour, year of construction, water capacity, nature of product, tare weight in kilogrammes, and LP Gas
quantity in kilogrammes, including the registration of the serial numbers of the batch of new cylinders. Government
must then issue a certificate of compliance and registration after successful inspection.
The Regulatory Commission9 should be involved in the inspection and the registration of any new cylinder batch
(imported or locally manufactured) prior to permitting its introduction into the market. The same Commission can
also control the authorisation and registering of recertification and scrapping of cylinders, etc.
LP Gas Distribution Regulations can specify standard capacities for LP Gas cylinders, stipulating that LP Gas cylinder
capacities shall be (for example) of one, three, five and twelve kilogrammes (for example), or simply specifying
standard diameters of cylinders for optimising the size and formats of the country’s filling conveyors, cylinders cages,
transportations pallets, and so on.
Table 4 Examples of Typical Cylinder Sizes
Country Most Common Size of Cylinder List of Size of Cylinders

Brazil 13 kg 2 - 5 - 13 - 20 - 45 - 90 kg
Morocco 12 kg 3 - 6 - 12 - 35 kg
Turkey 12 kg 2 -12 - 16 - 24 - 45 kg
Japan 20 and 50 kg 2 - 3 - 5 - 8 - 10 -1 5 - 20 - 30 - 50 kg
India 14.2 kg 5 - 14.2 - 19 - 47.5 kg
5.2. Licensing the LP Gas Marketer
A company shall not conduct activities in LP Gas wholesale, in distribution of LP Gas in cylinders, in distribution of LP
Gas into bulk tanks or filling of LP Gas cylinders, unless it has an LP Gas marketer’s license issued by the Commission in
full accordance with the LP Gas Distribution Act (law and regulations). The license terms must include a requirement
to invest in a minimum level of cylinders over time. This is described in more detail below.
Here follow the best-practice guidelines for licensing and regulating LP Gas marketers.
Key Rights and Entitlements
The LP Gas marketer shall be the only registered and licensed entity that is permitted:
1. To invest in ownership of cylinders (imported or locally manufactured),
2. To register its cylinders under a registered brand name and colour,
9
Regulatory Commission, or “Commission”, refers to a governmental body designated by Government to monitor the
efficiency and effectiveness of all regulations, their enforcement, and compliance, in regard to LP Gas in particular or, as is
done in many countries, in regard to energy and petroleum products generally (including LP gas). The Commission may have a
certain level of representation from industry, such as the national LP Gas Association, the Appliance Manufacturers
Association. (See also Glossary definition.)
3. To introduce cylinders into the market under the refundable deposit scheme of the Marketer-Controlled
Cylinder Model,
4. To purchase LP Gas, whether from local LP Gas producers or by means of importation, in order to resell it in
cylinders or in bulk stationary tanks to end-user consumers,
5. To fill and refill its cylinders properly in its licensed filling plant(s) or in the licensed filling plant(s) of another
properly licensed LP Gas marketer, and vice-versa,
6. To apply for a permit to construct and operate a cylinder filling plant and/or to enter into a filling subcontract
with one or more other LP Gas marketers,
7. To appoint and license a network of exclusive, governmentally-registered distributors. This point is very
important, because the appointment of exclusive distributors plays a major role in minimising potential loss
of control of the cylinders moving through the market. For example, imagine Coca-Cola allowing its bottling
franchisees to fill for Pepsi, or to fill Coca-Cola bottles with Pepsi, or to fill Pepsi bottles with Coca-Cola,
8. To register with Government all the delivery trucks of each distributor. A governmental procedure for such
registration must be defined,
9. To approve the registration of the retail outlets contracted by its distributors,

10. To wholesale LP Gas in bulk to other licensed LP Gas marketers.
Key Obligations
The LP Gas marketer shall have the obligation and the responsibility:
1. To invest and introduce into the market, under the refundable deposit scheme of the Marketer-Controlled
Cylinder Model, a minimum of 75,000 cylinders over five years. This number and time-horizon should be set
by Government according to the country’s local conditions and goals for LP Gas market expansion, but 75,000
over five years is recommended as appropriate, even in very early-stage markets.
Why 75,000? Why five years? This may seem arbitrary but is not, and therefore an explanation for the
implications of choosing one number over another is in order. Governments in developing countries often
seek to keep this number small, to help new competitors (who may have limited access to capital) more
easily enter the market. The consequences to the market of having many small new entrants, vs. a few
larger, better-funded participants, must be explained. To create stability in the market over time, to create
greater confidence among consumers and potential distributors and retailers that the LP Gas marketers from
which they will buy will stay in the market for the long term, to facilitate regulatory compliance and
enforcement, to facilitate sharing of infrastructure, and to obtain better commercial terms and service from
international traders (where LP Gas must be imported), having a group of larger players in its early stages can
help the market to develop in a more predictable and stable manner, so that it is more likely to remain
commercially viable even if the ability of Government to enforce the rules is somewhat variable during that
time. Larger commitments for future cylinder investment from LP Gas marketers seeking licenses, spread
over a reasonable time-horizon, are good for sustainable market growth.
With the refundable deposit scheme, the LP Gas marketer does not actually need capital in direct proportion
to the number of cylinders in its license commitment. The collected deposits from one wave of cylinders are
used, in practice, to fund investment in the next wave of cylinders. What is key is to obtain a commitment on
investment in a meaningful quantity of cylinders over a period of time from all the players in the market. For
example, In Vietnam, which has achieved very good LP Gas market growth starting from an early stage, the
licensing condition was 300,000 cylinders over 10 years.
For countries with early-stage LP Gas markets, it is recommended that the LP Gas Distribution Regulations
also stipulate, separate from the license requirements, that a certain minimum quantity of cylinders must be
purchased by the LP Gas marketer over a certain period of time, as development of the market requires. The
Commission must request a copy of the certificates of purchase of the cylinders along with the certificates of
inspection,
2. Ensure the development of the distribution system, by all means available, through appointed exclusive
distributors or through direct delivery to the end-user customer,
3. Ensure the appointed exclusive distributors develop an adequate network of retail outlets or perform home
delivery,
4. Ensure strict compliance by the distributors with (and not limited to) national Labour Law, Commercial Law,
5. Ensure proper safety certification, after training of all the participants in the supply chain connected with the
LP Gas marketer, including its distributors and the employees of the distributors,
6. Ensure no illegal practices occur, such as cross-filling and collecting/hoarding other marketer’s cylinders in
violation of law or regulation.
Note: One method to detect such practices among registered companies is to compare each competitor’s
declared LP Gas sales with the number of cylinders officially registered by that competitor,
7. Report any changes regarding delivery trucks to the Commission,
8. Obtain inspection approval for any new batch of cylinders prior to their introduction into the market,
9. Register the brand and colour of its cylinders prior to investing in cylinders. A specific administrative
procedure must define how this registration requirement shall be enforced,
10. Comply strictly with the National Safety Act and the LP Gas Safety Act in order to maintain a constant,
acceptable level of safety in the LP Gas distribution and supply chain,
11. Remove from the market any of its cylinders which are defective or otherwise become dangerous.
Restrictions and Prohibitions
1. It is forbidden for anyone who does not have an LP Gas marketer’s license to purchase and resell LP Gas as a
wholesaler, such as to other marketers,
10
2. It is forbidden to fill any cylinders belonging to another party ,
3. It is forbidden to collect, retain, transport, hide, store, divert and damage any cylinder belonging to another
party,
4. It is forbidden for anyone who does not have an LP Gas marketer’s license to obtain and to keep a permit to
operate a filling plant unless a written agreement has been signed with another LP Gas marketer, and the
agreement has been approved by the Commission,
5. It is forbidden to transport LP Gas in cylinder or in bulk in a vehicle that has not been registered with the
Commission,
6. It is mandatory to give access to any LP Gas premises, such as depots and filling plants and distributors’
depots, to the designated team in charge of an inspection ordered by the Commission or requested by the
national LP Gas association.
10
Except for filling the cylinders of another licensed LP Gas marketer under an outsourcing contract that has been approved by
the Commission.
5.3. Licensing the LP Gas Cylinder Distributor
Only a licensed LP Gas marketer can appoint an LP Gas cylinder distributor, through an exclusive “Distributorship
Agreement”.
The Distributor Agreement must require that the distributor complies with the key terms of the LP Gas Distribution
Regulations, in particular that:
1. The cylinders remain the property of the LP Gas marketer, and the LP Gas marketer can only transfer its LP
Gas assets including cylinders (as by a sale or acquisition) to another, new or existing, licensed LP Gas
marketer,
2. No other LP Gas marketer’s cylinders may be collected and exchanged,

3. Only the LP Gas marketer can refill the cylinders,
4. The distributor must develop its network of retail outlets,

5. The distributor must strictly comply with the rules of the refundable deposit scheme,
6. The distributor must strictly comply with the safety rules provided by the LP Gas marketer, and in any case
with the LP Gas Safety Act,
7. The distributor must provide a continual supply of cylinders into the market,
8. The distributor must strictly comply with all relevant commercial law and regulation.
5.4. Licensing the Transportation of LP Gas by the LP Gas Marketer
A person or company shall not transport LP Gas by road, except in accordance with the LP Gas Distribution Regulations
and the terms and conditions of a valid transportation license provided by the LP Gas marketer and registered with
the Commission.
These provisions shall not apply to LP Gas in a private vehicle transported by a consumer in a standard capacity
cylinder or cylinders not exceeding an aggregate quantity of forty kilogrammes. (That is, a consumer who picks up a
full cylinder from a retail outlet using his/her private automobile does not require a special license to transport the
cylinder.)
Further provisions are:

1. Only an LP Gas marketer can authorise the transportation of LP Gas in bulk or LP Gas in cylinders under its
control,
2. Only an LP Gas marketer may provide LP Gas transportation services, which must either belong to the LP Gas
marketer or must be contracted to one of:
 A licensed LP Gas cylinder distributor, in the case of cylinders,
 A licensed LP Gas truck transporter, in the case of bulk and/or cylinders,
3. It is the responsibility of the LP Gas marketer to provide:
 A copy of the certificate certifying that the vehicle meets the applicable national standards for vehicles
transporting LP Gas,
 A valid vehicle inspection report,
 A valid clearance certificate from the Chief Fire Officer in accordance with the Local Government Act or
equivalent law/regulation,
4. A licensee shall not transport in its vehicle LP Gas from an unlicensed party or discharge from its vehicle LP
Gas to a party that is not licensed under these Regulations,
5. A licensed transporter shall not transport in its vehicle LP Gas from a party not licensed to possess bulk LP
Gas; or having so received LP Gas into the vehicle, discharge or cause to be discharged such LP Gas to a party
that is not licensed to store LP Gas in bulk,
6. The LP Gas marketer must ensure that each driver engaged for the purpose of transporting LP Gas:
 Has a valid driving license,

 Is certified in accordance with the Safety Act,
 Has attended a prescribed basic training course providing appropriate knowledge of LP Gas and
petroleum products and in defensive driving,
 Has a medical certificate certifying his/her fitness to drive trucks carrying hazardous products.
5.5. Regulating LP Gas Cylinder Collection and Exchange
Since the LP Gas cylinders are the property of the LP Gas marketer, no licensed or unlicensed participant in the
distribution of LP Gas in cylinders may collect, store, retain, divert, hide, or alter any cylinder belonging to another
marketer, without the right or the consent of that LP Gas marketer. Only with written agreement or consent of an LP
Gas marketer, can another marketer collect cylinders which are not its property.
Any such agreement must describe the conditions set for the exchange and the collection of the cylinders.
In no event may any party other than the end-user customer obtain the refund of its deposit from LP Gas marketer to
which the cylinder belongs (or from its authorised retail outlet or authorised distributor). The end-user customer may
not provide his/her cylinder to a competing LP Gas marketer (or its retail outlet or distributor) in order for it to collect
the refundable deposit on the customer’s behalf.
5.6. Licensing for Bulk LP Gas Storage within Bulk Consumers’ Premises
Only a licensed LP Gas marketer can apply for authorization to install an LP Gas bulk tank for an LP Gas bulk consumer.
By agreement between the LP Gas marketer and the LP Gas bulk consumer, the LP Gas marketer will be the owner of
the installation and will guarantee supply of LP Gas in full compliance with the conditions of the Safety Act and LP Gas
Safety Act, in particular concerning the LP Gas installation within the consumer’s premises.
Any failure in compliance with the rules regarding the safety of the installation must result in the termination of the LP
Gas marketer’s authorisation, and its replacement by another LP Gas marketer.
The LP Gas bulk consumer shall have no right to resell LP Gas from the LP Gas storage belonging to the LP Gas
marketer.
Only the LP Gas marketer can decant any existing LP Gas in the LP Gas tank into the tank of the LP Gas marketer’s own
bulk truck.
A file shall be prepared and kept for each installation. The file must include the application with the approved
drawings of the installation and at least the following information:
 The exact street address of the facility to be authorised for the bulk storage,
 A declaration of the intended use of the LP Gas that is to be stored in the facility,
 The position of the facility in relation to adjoining property including the distances from neighbouring
buildings,
 The position and capacity of all tanks, storage sheds and filling stations (if any), the position of all buildings,
structures or other works within the installation, and the manner in which the LP Gas is to be stored,
 All lighting arrangements, including the position of electric cables, switches and fuse boxes, drainage system,
water connections, fire hydrants and fire-fighting appliances,
 A clearance certificate from the Chief Fire Officer in accordance with the Fire Fighting Act or equivalent
law/regulation.
5.7. Sanctions, Penalties and Appeals against a Decision of the Commission
Enforcement actions for compliance with the LP Gas Distribution Regulations, the LP Gas Safety Act and other relevant
Acts can be requested by an LP Gas marketer, or a public body like the Commission.
Inspections may be conducted by a designated expert in agreement between the national LP Gas Association (as the
representative of the LP Gas marketers) and the Commission.
Inspections can also be conducted by a specific team of experts designated by the Commission and/or the national LP
Gas Association. The inspections can occur in any filling plant.
Note: In very small filling plants, controls may be incomplete or inadequate. If smaller, remote mini-plants are
allowed, Government must address the question of what minimum capabilities such a filling plant must have, and how
to establish a workable scheme for cylinders to return frequently to a main, large-scale plant for complete inspection
and then maintenance, recertification and/or scrapping.
5.8. Reporting of Investigations and Enforcement Actions
The Commission or any authorised party acting on its behalf11 may enter and inspect any vehicle, premises or facility
reasonably believed to be involved in the business of importation, exportation, wholesale, retail, storage, filling or
transportation of LP Gas.
The Commission may give mandatory directions to the owner, occupier, driver or a person in charge of a vehicle,
premises, installation or facility as it considers necessary.
The Commission may call upon a licensee, by a notice in writing and within such time as the Commission may indicate
in the notice, to execute any repairs or remediations to the licensed premises.
5.9. Reporting of Accidents and Fires
A licensee shall, in writing and within 48 hours or less, report to the Commission
 Any accident involving LP Gas or the transportation of LP Gas which causes injury to an employee or any
other person or damages any property,
11
Well-qualified, duly authorized independent agents engaged and empowered by the Commission in order to cover the
entire geographic market are a common feature in a developing country.
 Any accidental release of LP Gas,
 Any fire in which LP Gas is involved.
The Regulations will define the level of sanctions and penalties and all related procedures for appeal.
In the event of severe or repeated misconduct of any licensee, the Regulations should require suspension or a
revocation of the license.
5.10. The LP Gas (or Energy) Regulatory Commission
The Commission is the governmental body with the power to do at least the following:
1. Issue, renew, modify, suspend or revoke licenses and permits for all undertakings and activities in the LP Gas
sector (or energy sector),
2. Make proposals to the Minister of regulations which may be necessary or expedient for the regulation of the
LP Gas/energy sector or for carrying out the objects and purposes of the LP Gas Distribution Act or the LP Gas
Safety Act (hereafter, the “Acts”),
3. Formulate, enforce and review environmental, health, safety and quality standards for the LP Gas/energy
sector, in coordination with other statutory authorities and the LP Gas industry,
4. Enforce and review regulations, codes and standards for the LP Gas/energy sector, in liaison with LP Gas
industry representatives such as the national LP Gas Industry Association,
5. Prescribe the form and manner in which any application for a license or permit or amendment thereof or
objection thereto shall be made and the fees payable in respect of any such application,
6. Prescribe the form and manner in which any application for any authority, consent or approval under the Acts
shall be made,
7. Prescribe the conditions which may be attached to the grant of licenses or permits, consent or approval
under the Acts,
8. Make and enforce directions to ensure compliance with conditions of licenses or permits issued under this
Acts,
9. Impose sanctions and penalties on parties that are in breach of any of the provisions of the Acts or any
regulations made thereunder.
5.11. The LP Gas Safety Act
The “Safety Standard Act” or “National Safety Act” means the specifications, norms and/or code of safety practice
declared by the National Standards Council of a given country.
The “LP Gas Safety Act” gathers all rules, instructions and obligations regarding the storage of LP Gas in bulk and in
cylinders, filling of cylinders, filling facilities, installation of LP Gas tanks for bulk customers, transportation of LP Gas in
bulk and in cylinders by road and by railway. It includes all national norms and standards of construction for all LP Gas
containers and facilities.
Example: Application to Construct and Operate an LP Gas filling plant
The Safety Act defines the content of such an application and the conditions to obtain approval. Requirements may
include a copy of approved drawings in accordance with the Local Government Act with specifications and plans in
duplicate indicating:
1. The facility to be licensed, giving particulars of the materials and construction,
2. The position of the facility in relation to adjoining property including the distances from neighboring buildings,
3. In the case of an installation, the position and capacity of all tanks, storage sheds and filling stations (if any), the
position of all buildings, structures or other works within the installation, and the manner in which the LP Gas is
to be stored,
4. All lighting arrangements, including the position of electric cables, switches and fuse boxes, drainage system,
water connections, fire hydrants and fire-fighting appliances,
5. A clearance certificate from the Chief Fire Officer.
WLPGA can assist in providing access to typical filling plant specifications, especially regarding safety distances and
hazard zones.
Figure 10 Firefighting Water Storage and Pumps in Morocco
Figure 11 A Cylinder-Filling Carousel at a Filling Plant
Chapter Six
Design and Safety Considerations for Cylinders and Refilling
6.1. Cylinder Basics
The WLPGA’s Good Practice Guidelines for LP Gas Cylinder Management contains details of the standards and typical
designs of LP Gas cylinders. These international standards define the type of material from which the cylinder is
manufactured, its thickness, how it can be welded, and so on. They also define in detail the applicable procedures to
be performed before, during and after refill of the cylinder at the filling plant.
Before an LP Gas marketer can purchase cylinders, the LP Gas marketer must decide the purpose the cylinder must
fulfill.
The WLPGA’s Good Practice Guidelines for Cylinder Management addresses the lifecycle safety considerations for LP
Gas cylinders, including selection of an LP Gas cylinder, cylinder design, manufacturing, maintenance, repair and
requalification and cylinder scrapping.
The WLPGA’s Guidelines for Good Safety Practices in the LP Gas Industry, produced in cooperation with the United
Nations Environment Program, is a comprehensive guide to safety issues throughout the entire LP Gas supply and
distribution chain.
WLPGA Publications are available for free at: http://www.worldlpgas.com/resources/publications
Design of the Cylinder
Cylinders must be manufactured by an approved manufacturer under an appropriate quality control system, and that
manufacturer must be authorised to apply the international standards mark for the standard to which the cylinder is
designed.
International standards for LP Gas cylinders include:
 EN 1442,
 ISO 4706,
 US DOT Code 49CFR 178.
The cylinder must be fitted with an appropriate valve for its application, which must also be manufactured by an
approved manufacturer authorized to apply the standard mark for the standard to which the valve is designed.
Filling Procedures
Section 6.4 below describes international norms and procedures for refilling operations.
The cylinder must be filled to the correct level, by mass (weight), using the tare weight method.
The cylinder is normally filled by mass on an automated weighing machine. The mass of the metal components of the
cylinder is marked on the cylinder along with the mass of LP Gas that it is designed to contain safely. The weighing
machine then stops filling the cylinder when the total design mass of metal plus LP Gas is reached.
Further checks are then performed to ensure that the final mass is correct and any corrections applied before the
cylinder is checked for leakage and prepared for despatch.
The international standards for LP Gas cylinders require them to be filled to a calculated level, which changes with the
ambient temperatures in the country of use. This is required because lighter petroleum products expand most as
temperature rises. If an LP Gas cylinder were filled completely full or nearly full and were then exposed at length to
direct sunlight or higher ambient temperatures, the liquid inside would attempt to expand beyond the available space,
causing the internal pressure on the walls of the cylinder to rise rapidly. As the pressure rises too far, the cylinder
distorts to the point where it bursts.
This is a main reason why good control over the cylinder filling process is so important for public safety.
Below is a picture of the failure of a cylinder because of overfilling.
Figure 12 A Failed, Overfilled Cylinder
Worldwide experience has shown that if the LP Gas market is not controlled by sufficient national regulations, well-
enforced, to ensure cylinders are safe and are safely filled, inspected, maintained and scrapped when defective, the
market will become dysfunctional and fail to grow.
Sizes of Cylinders
Cylinders may be required in a number of sizes to meet local market needs. As mentioned previously, cylinders are
normally sold according to the mass of their contents. For example, 3 kg, 5 kg, 9 kg, 12 kg, 18 kg and 48 kg cylinders
may co-exist in a given market.
It is in the interests of all market participants to minimize the variation of sizes, as variations increase supply chain
cost. The LP Gas Marketer may decide to have all sizes it stocks be of the same outside diameter, to facilitate use of
standardized filling and transport equipment.
Cylinders and Ambient Air Temperatures in the Market
The type of LP Gas available to the market may range from almost pure butane, through various mixes, to almost pure
propane. Generally, the propane/butane mix to a region is specified to accommodate the local ambient temperatures.
As butane will not boil below zero degrees Centigrade, it will not form gas for the customer below that temperature
and will remain in the cylinder rather than flow out through the open valve.
Thus, for very cold climates, butane cannot be used. Propane, with a boiling point of minus 40 degrees Centigrade,
must be mixed into the LP Gas to ensure the gas boils off and to increase the pressure (because propane is a higher
pressure liquefied gas than butane).
Together, these two chemicals form the LP Gas that is provided to customers. In some countries with major variances
between summer and winter temperatures, the mix is changed as required by the seasonal temperature variation.
The above cylinder parameters are, in effect, dictated to the LP Gas marketer by the local climate.
Additional Cylinder Design Considerations
The LP Gas marketer must also decide, based on how the cylinder will be used, whether it should be constructed from
lightweight or heavier material, what type of handle or footring is fitted to it, what type of valve is suitable for the
application, and whether the top of the cylinder must accept direct connection of an appliance. The cylinder must be
able to withstand use and a degree of abuse within its expected market conditions.
6.2. The ADR Agreement: United Nations Model Regulations for LP Gas
The UN Model Regulations for the Transport of Dangerous Goods define LP Gas as one of many “Dangerous Goods”
that are packaged and transported around the world, including most fuels. The UN defines the cylinder as a
“package”. Many of the same experts from the LP Gas industry who participate in the UN Sub-Committee of Experts
on Transport of Dangerous Goods also participate in the ADR joint meetings, also managed by the UN Economic
Commission for Europe. ADR is the agreement between participating countries on the rules for the international
transport of dangerous goods by road. The agreement includes all the European countries and many others.
Along with ADR, there are further sets of rules, such as ADN for inland waterway transport, IMDG for international
marine transport, and RID for international rail transport.
As road transport carries by far the widest variety of dangerous goods in packages and in bulk, the ADR agreement is
very comprehensive. In the case of LP Gas cylinders it defines the quantity of LP Gas that can be filled into a certain
size of cylinder (the filling ratio), the type of vehicle that can be used to transport it, and the training for those
involved in the transport.
ADR is used in many countries that are not yet signatories to the agreement as the basis for their national laws on
transport of dangerous goods, and ADR is national law in its entirety for all European Union countries.
ADR is therefore highly recommended as a core component of the laws and regulations of countries with early-stage
(and mid-stage and mature) LP Gas markets concerning the safe filling and transport of LP Gas cylinders.
Control of import of LP Gas cylinders to a country should require that each batch of cylinders have traceable test
certificates certifying the design of each cylinder within a cylinder serial number range.
ADR on Cylinder Recertification
ADR requires re-certification of gas cylinders every 10 years, but for steel cylinders filled in compliance with a
recognised filling standard, in an approved filling plant, with quality assured inspection before during and after filling
in accordance with EN 13952, the cylinder re-certification period (requalification) may be extended to 15 years.
EN 1440 defines the periodic inspection requirements for LP Gas cylinders.
Repair of defective cylinders must also be controlled, and where any hot work is done on the pressure-containing
portion (as opposed to the shroud or footring), the cylinder must be re-certified.
ADR can be found at: www.unece.org/trans/danger/publi/adr/adr_e.html
6.3. Cylinder Valves

12
The cylinder valve plays a critical role in consumer safety. Generally, a regulator is connected to the valve, and a
hose is connected to the regulator to bring the gas supply to the appliance, such as a stove. The gas passes from the
cylinder through the regulator, where it is reduced in pressure to a constant supply pressure appropriate for the
appliance. This low pressure gas passes along a flexible LP Gas pipe or hose to the appliance.
All of these items work together to ensure a safe installation. EN 15202 defines the dimensions for cylinder valve
outlets and matches with EN 12864, the low pressure regulator standard, so that the fit between valve and regulator
is correct and thus does not leak.
There are two broad types of LP Gas cylinder valves, manually operated and self-closing.
 Standard EN-ISO15995 covers the design of manually operated LP Gas cylinder valves,
 EN-ISO14245 covers self-closing LP Gas cylinder valves.
The manually operated valve is the traditional valve style with a hand-wheel to open and shut the valve. The regulator
connection is screwed into the outlet of the valve.
Figure 13 Manual LP Gas Cylinder Valve
The alternative self-closing or clip-on valve is a vertical connector on the cylinder and the regulator is pushed down
onto it, clipping into position. The on-off control for the LP Gas supply is on the regulator, but it acts on the cylinder
valve to open it or close it.
12
The regulator’s main function is to cause the gas to leave the cylinder at an approximately constant pressure, whether the
cylinder is full or nearly empty, or in-between.
Figure 14 Self-Closing or Clip-on LP Gas Cylinder Valve
It is important that both types of valve are fitted with a safety cap when not attached to an appliance, as dirt or sand
entering the valve can cause it to leak. Because of their vertical orientation, this is particularly important for self-
closing valves. In many cases the cap has an anti-tamper feature which makes it evident if it has been removed and
replaced, which might indicate that either the cylinder was not filled at the supplier’s facility or that some gas has
been removed from the cylinder before it reached the customer.
Government should include cap requirements in its national standards for LP Gas cylinders.
Figure 15 Valve with Cap Figure 16 Valve with Anti-Tamper Cap
Figure 17 A Cylinder with Tare Weight Indication to Simplify Filling, Heat-Shrink Anti-Tamper Sleeve and
Customer Safety Label
6.4. Filling LP Gas Cylinders
According to the ADR (Part 4, Chapter P200, Article 7), the filling of cylinders must take place only in an
installation specifically designed for that purpose.
Appropriate safety systems are described in the WLPGA’s publication Guidelines for Good Safety Practices in
the LP Gas Industry.
Filling plants must be equipped accordingly and be in good working order, with adequate operational and
safety procedures and adequately trained and supervised personnel.
EN 1920 and EN 13365 describe the inspection of cylinders at the time of filling; EN 1439 describes the
procedures for checking LP Gas cylinders before, during and after filling, and EN 13952 describes the filling
procedures for LP Gas cylinders.
All personnel engaged in LP Gas cylinder filling should be fully trained and competent to perform their
activities. These activities will include:
 Cylinder handling,
 Pre-filling inspection for damage or whether cylinder has exceeded its inspection period,
 Checking tare weight and fill weight on cylinder,
 Cylinder filling,
 Leak checking.
Defective cylinders must have their contents removed before repairs, such as valve replacement, can be
performed. This process is known as “decanting”. This transfer of LP Gas away from the normal cylinder filling
equipment can add additional safety risk. Therefore, specific training and skills are required. The need to
replace valves is a common requirement in filling operations. The global LP Gas industry has established a
standard rate of leakage beyond which the valve must be replaced, at 5 g per hour.
Figure 18 A Cylinder Decanting System
Measures must be put in place to prevent accidental release of LP Gas and to recover from any release by
closing off the source and immediately initiating fire prevention measures.
The internationally recognised standard for the design of filling facilities comes from the US National Fire
Protection Association, NFPA58. Also from the USA, API 2510 covers fire protection of LP Gas facilities.
Figure 19 LP Gas Storage at a Filling Plant and the Fire-Fighting System
Figure 20 An Uncontrolled Cylinder Filling Facility Filling all Marketers’ Cylinders
Further Reading
A useful list of standards and guidance documents and links to the standards bodies and World LP Gas
Association are presented in Appendix 2.
Chapter Seven
Summary of Key Question and Answers
These Guidelines posed a number of questions that Government and other stakeholders must answer when
seeking to expand access to, and use of, LP Gas on a large scale and on a commercially sustainable basis in an
early-stage LP Gas market.
This Chapter restates the questions and provides a short answer to each based on the international best
practices, worldwide experience, lessons and rationales set forth earlier.
From Section 2.1:
Six main factors which Government (together with key stakeholders) must consider and address in order to
undertake, to accelerate and to sustain an LP Gas market transition from early-stage to mid-stage:
1. How to create and to sustain necessary and sufficient conditions for the LP Gas industry to increase
continually and substantially the quantity of safe cylinders in use in the market.
A: Implement nationally and uniformly the Marketer-Controlled Cylinder Model. LP Gas marketers
invest in cylinders and accessories (e.g., valves) that comply with certain common national
standards, make the cylinders and accessories available to distributors and consumers through a
chain of deposit payments, control the cylinders’ refilling, are liable for the cylinders’ safety, and
are responsible for inspecting, maintaining and scrapping (as needed) their cylinders whenever the
cylinders are refilled. Access to LP Gas in bulk is restricted to the LP Gas marketers. Centralisation
of filling facilities is favored over decentralisation.
All of these things are defined and established via appropriate law and regulation. These laws and
regulations must be enforced rigorously and consistently by Government, either directly or
through appropriately empowered enforcement agents.
2. How to establish (or to guide a transition to) a reliable, convenient, effective and efficient market-wide
cylinder distribution system for filling, refilling, inspecting, repairing and retiring of LP Gas cylinders.
A: The Marketer-Controlled Cylinder Model includes as a key feature the development by the LP Gas
marketers of networks of exclusive distributors serving dense local networks of retail outlets that
are located within walking distance of consumers, or through direct delivery of filled LP Gas
cylinders to the home.
3. How to ensure a consistent, high level of safety for end-users of LP Gas over time.
A: Government must define and enforce rigorously and consistently the laws, national standards,
regulations and licensing terms which establish the Marketer-Controlled Cylinder Model for the
national LP Gas market, as described throughout these Guidelines.
Dangerous or destructive behaviors by illegitimate and/or non-compliant market participants must
be stopped, stopped early, and stopped permanently whenever they arise.
World experience has shown that in early-stage markets in developing countries, such actors and
behaviors arise with great frequency, and only high and sustained vigilance by Government can
keep them from expanding to a point where further development of a commercially sustainable,
large-scale LP Gas market becomes impossible and the safety of the public is imperiled.
4. How to ensure that LP Gas remains physically available to supply the market without interruption or
shortages.
A: This is beyond the scope of these Guidelines to address fully. However, where LP Gas must be
imported, by establishing a robust national LP Gas market model and distribution system in
accordance with these Guidelines, world experience teaches that international LP Gas traders will
be more likely to sell into the country’s LP Gas market.
5. How to ensure that financial flows from LP Gas consumers back to the investors in LP Gas cylinders
and to the suppliers of LP Gas remain adequate for legitimate participants in each part of the supply
chain to perform their role and to grow over time.
A: Three elements work together to ensure that financial returns to investors and legitimate
operators in the LP Gas market are adequate for them to stay in the market and help it grow. They
are: Having stable LP Gas supply at a national and regional level; establishing and implementing
completely and uniformly the national LP Gas market model described in these Guidelines through
appropriate law, national standards, regulation and licensing requirements; and rigorously and
consistently enforcing of the laws, standards, regulations and licensing requirements by
Government.
If any one of those three main elements is weak or lacking, financial flows can become too
unpredictable to justify on-going participation and investment by legitimate private-sector
participants in the LP Gas market.
Public confidence in the LP Gas market can also be lost, if there are too many supply shortages or
fires and explosions.
6. How to align and optimise governmental fiscal and pricing policies (if any) regarding LP Gas and LP Gas
equipment (domestic and imported) relative to competing fuels.
A: While this topic is beyond the scope of these Guidelines, world experience has shown that well-
designed fiscal policies and (where used) pricing policies regarding LP Gas and competing fuels are
an important issue.
If done in the right way, such policies allow early-stage LP Gas markets to develop into much larger,
mid-stage markets for the benefit of the country’s people.
This has been the case in countries which have had more intrusive fiscal and/or pricing policies
regarding fuels, and also in countries which have had less intrusive policies. For example,
temporary fiscal schemes have been used in some countries to motivate consumers to switch to LP
Gas (with subsidy and/or without tax) from kerosene or charcoal (without subsidy and/or with tax).
If not done in the right way, such policies can make the development of the LP Gas market more
complex and more difficult. In some cases, it can lead to a national LP Gas market becoming
commercially unsustainable. This has been the case in a number of countries as well.
From Section 2.3:
Questions whose answers define the national market model for LP Gas:
1. Who is permitted to own the LP Gas cylinder once it enters the market?
A: Only licensed LP Gas marketers that invest in own-branded cylinders.
2. Who is liable for the LP Gas cylinder over its life?

A: The LP Gas marketer that invested in, and owns, the cylinder.
3. How is liability and responsibility for the safety of a cylinder enforced?

A: By Government a) enacting comprehensive laws, regulations and licensing requirements as
outlined in these Guidelines (see also Chapter 4 and Appendix 2) with meaningful, credible
penalties for non-compliance, and b) putting in place an effective nationwide enforcement system
and organisation, answerable to a Regulatory Commission, capable of identifying and penalising
(including shutting down) non-compliant parties and incentivised so as to be largely free of
possible corruption.
4. Who is permitted to fill and refill LP Gas cylinders, and under what conditions and limitations?
A: Only the LP Gas marketer that invested in, and owns, the cylinder. Filling facilities should be
sufficiently centralised and of sufficient scale and capability to ensure that all necessary safety
processes are followed. Filling facilities must be constructed and operated in compliance with
strict safety and other laws and regulations, which must be enforced by Government.
5. Who is permitted to obtain LP Gas for the purpose of filling and refilling cylinders?
A: Only licensed LP Gas marketers.
6. What kinds of LP Gas cylinders and accessories (such as valves) are permitted to be used?
A: Government must define in law and regulation a set of common standards for the sizes of cylinders
and for the safety characteristics of cylinders and accessories (such as valves) that are allowed to
be used in the market. Subject to meeting those standards, LP Gas marketers may introduce
improvements of their own, in order to provide greater choice to consumers and to provide an
additional basis for healthy competition.
7. What technical, operational and safety standards must be followed by LP Gas market participants?
A: These standards must be defined in regulation by Government and enforced by Government.
References to applicable international standards, enacted and in use in many countries that
successfully developed their LP Gas markets, are provided in Chapter 4 and in Appendix 2.
8. What fiscal and pricing policies (if any) should Government adopt regarding LP Gas and LP Gas
equipment and regarding competing fuels and equipment?
A: Addressing this question, whose answer is extremely important to the effective development of a
large-scale LP Gas market, is beyond the scope of these Guidelines.
9. In what ways will LP Gas market participants’ behavior be regulated by Government?

A: These Guidelines, taken as a whole, represent the global best practices for addressing this
question.
(The answer is somewhat different for mid-stage and mature markets than for early-stage markets.
Governments and stakeholders concerned with mid-stage and mature LP Gas markets should
consult the corresponding editions of this Guidelines series.)
The main way is through defining completely and uniformly a national Marketer-Controlled
Cylinder Model through appropriate law, standards, regulations and licensing, and enforcing
rigorously the applicable laws, standards, regulations and license requirements.
The stakeholder with primary responsibility for this task in an early-stage LP Gas market is
Government.
10. What are the penalties when an LP Gas market participant does not comply with applicable laws,
national standards, regulations and license terms?
A: Failure to comply, particularly if repeated, must lead to revocation of licenses and permits, and,
depending on severity and nature, should lead to civil and/or criminal penalties.
It is critical for Government to send a signal to the market that illegal behaviors which put the
public at risk of disasters, and which defeat the national goal of expanding access to and use of LP
Gas in a commercially sustainable way, will not be tolerated.
It is equally critical that all market participants and potential entrants view the threat of such
penalties as credible. That can only be assured through rigorous enforcement and consistent
imposition of appropriate remedies and penalties wherever merited.
Appendix One
Glossary of Main Terms
ADR. An international agreement concerning movement of dangerous materials, including transport and
handling of LP Gas. See Appendix 2 for more information.
Appointed distributor, registered distributor or exclusive distributor. An independent person appointed by a

licensed LP Gas marketer through a “Distributorship Agreement”. The Distributorship Agreement defines an
exclusive territory and allocates rights and responsibilities within it, including the obligation to protect the
brand he/she is entitled to market, the right to collect any branded cylinders to which he/she is entitled in the
territory, the obligation to build an effective distribution network, and the obligation to serve all outlets and/or
direct consumers. He/she is entitled to receive new cylinders against the payment of a refundable deposit.
He/she has the obligation to collect all empty cylinders and return them to the LP Gas marketer’s designated
filling plant. He/she will receive refilled cylinders at the LP Gas marketer’s filling plant. In his/her territory,
he/she will represent the brand and the LP Gas marketer. He/she is not allowed to take the LP Gas marketer’s
cylinders to be filled at any facilities other than those of that LP Gas marketer.
Commission or regulatory commission or regulator. An agency or department of the national and/or

provincial/state Government responsible for setting, implementing and enforcing rules in accordance with
current law and Government policy. In these Guidelines, the Commission refers to the governmental body with
specific oversight responsibility for LP Gas, although its scope of authority may also include other forms of
energy. (If no such body exists in a given country, it is essential that one be established, duly authorised and
adequately funded to carry out its responsibilities.)
Consumer or end-user. The individual, household or business that buys and uses the LP Gas cylinder for its
intended purpose, such as cooking or space heating.
Cylinder valve. The valve on the top of an LP Gas cylinder, either of manual or self-closing type and
manufactured from brass to a recognised international standard.
Decentralised filling plant. A filling plant, small in size, that operates the filling of cylinders one by one, and
open or partially open to the public (i.e., consumers can get very close to the filling point). Usually operated by
an independent person under contract with the LP Gas marketer or a wholesaler of LP Gas. For early-stage LP
Gas markets, decentralised filling plants are not recommended, due to their heightened risks to LP Gas market
development and to public safety.
Distribution model or cylinder distribution model. Refers to rules and regulations under which a) cylinders will
be provided to the market; b) the corresponding ownership rights, responsibilities and liabilities in the cylinders
are defined; c) how cylinders will be exchanged (empty for full), refilled, inspected, maintained and scrapped;
and d) how cylinders will be distributed and collected. These rules and regulations, if defined, implemented
and enforced per these Guidelines, create the conditions necessary for the LP Gas market to grow and mature.
Any failure in properly defining, implementing or enforcing the rules and regulations may affect substantially
the viability and potential for sustained growth of the LP Gas market.
Filling plant. A plant where LP Gas is stored in liquid form and pumped into a variety of sizes and types of
cylinders. For safety reasons and international standards compliance, a centralised filling plant is not open to
the public.
LP Gas cylinder or cylinder. The container in which LP Gas is stored and transported and from which it is used
by the consumer. Its main components are the pressure vessel, the footring, the shroud at the top and a valve,
normally made of brass. It is properly manufactured to an international standard. Sometimes also called an LP
Gas “bottle”.
LP Gas distribution act or LP Gas distribution regulations. A comprehensive body of law and regulation
defining rights, obligations, responsibilities, controls and sanctions for all participants in the national LP Gas
supply chain, and defining thereby the LP Gas market model and cylinder distribution model. It includes the
licensing of LP Gas marketers, corresponding property rights associated with their cylinders, and the obligations
and liabilities of all participants in the distribution system down to the end-user customer. These regulations
must ensure complete consistency among all rights and obligations in order to incentivise the investment in
cylinders by licensed, compliant LP Gas marketers, to ensure public safety, to encourage stability in LP Gas
supply and costs, and to define the chain of responsibility whenever any damage, injury or liability arises.
LP Gas importer. An authorised person or business that brings LP Gas in bulk into a country, by sea, train or
trucks.
LP Gas Marketer. The LP Gas marketer is a licensed LP Gas market participant that safely fills and refills
cylinders and manages their distribution. Under the Marketer-Owned Cylinder Distribution Model, LP Gas
marketers are the sole entities authorised (licensed) by Government to invest in own-brand cylinders, to refill
cylinders (including inspection, maintenance and scrapping), to appoint exclusive distributors serving a network
of retail outlets or delivering cylinders to customers, and to import LP Gas or to participate in asset pools for
importing and storing LP Gas and/or filling cylinders with LP Gas. Under that model, they have ownership,
responsibility and liability for their own-brand cylinders. The use of this capitalised term is meant to indicate
that the marketer is properly licensed and in full compliance with all relevant laws, standards, regulations and
license terms.
LP Gas supplier or gas supplier. In the context of this document, the licensed LP Gas marketer.
LP Gas. Liquefied Petroleum Gas, a mixture of at least 90% propane and/or butane (in various proportions)
with no more than 10% of other hydrocarbons.
National safety act. See Safety Act.
Regulator or low pressure regulator. The device that is attached to the cylinder valve to cause the supply of
gas to an appliance at a constant, controlled low pressure.
Retail outlet, retailer, retail point, or cylinder retailer. Under the Marketer-Owned Cylinder Model, a person
or business who has entered into agreement with an LP Gas marketer’s distributor, or directly with an LP Gas
marketer, for selling LP Gas in the branded cylinders of the LP Gas marketer to first-time customers and for
acting as an exchange point for customers to pay to swap their empty cylinder for a filled cylinder. Under the
Marketer-Owned Cylinder Model, the retailer will obtain a cylinder inventory by paying a refundable deposit to
the LP Gas marketer’s distributor and, in turn, will collect cylinder deposits from first time end-users. Under
the Customer-Owned Cylinder Model, a cylinder retailer sells generic cylinders to consumers; the first cylinder
may contain LP Gas, but the customer must go to a separate filling facility to obtain refills. Under either model,
the retailer may be solely an LP Gas retail outlet operator, or the retailer may sell additional products.
LP Gas Safety Act. This body of law and regulation gathers all rules, instructions and obligations regarding the
storage of LP Gas in bulk and in cylinders, filling of cylinders, filling facilities, installation of LP Gas tanks for bulk
customers, transportation of LP Gas in bulk and in cylinders by road and by railway. It includes all national
norms and standards of construction for all LP Gas containers and facilities.
Safety Act, Safety Standard Act, or National Safety Act. This body of law and regulation includes the
specifications, norms and/or code of safety practice declared by the National Standards Council of a given
country. It is not limited to LP Gas. (See also LP Gas Safety Act.)
Seveso Directives. European Commission Directives on the prevention, preparedness and response to
chemical accidents. Seveso I: Adopted in 1982 to include the storage of dangerous substances in response to
severe accidents at the Union Carbide factory at Bhopal, India in 1984 that led to 2,500 deaths, and at the
Sandoz warehouse in Basel, Switzerland in 1986, where fire-fighting water contaminated with mercury,
organophosphate pesticides and other chemicals caused massive pollution of the Rhine and the death of half a
million fish. Seveso II: Adopted in 1996 to include control of major-accident hazards. Seveso II included a
revisions and extensions of the Directives’ scope; the introduction of new requirements relating to safety
management systems; emergency planning and land-use planning; and a reinforcement of the provisions on
inspections to be carried out by Member States.
Stakeholder. A person, entity, business or organisation participating either directly or indirectly in the LP Gas
market in a country.
Wholesaling, wholesaler. The sale of LP Gas in bulk, an activity and role restricted to LP Gas Marketers. (No
license to wholesale should be given to an entity which is not a licensed LP Gas Marketer having an investment
in LP Gas cylinders).
Appendix Two
List of Reference Documents
1. ADR
A multilateral agreement among participating countries on the rules for the international transport of
dangerous goods by road. It has been enacted in Europe as national law for all EU countries, where it defines
how dangerous goods cross land borders in and around Europe, and it is the basis of dangerous goods
transport laws in many other countries. It includes specific rules for LP Gas, including LP Gas filling (ADR
Chapter P200).
www.unece.org/trans/danger/publi/adr/adr_e.html
2. Publications of the WLPGA
 Guidelines for Good Safety Practices in the LP Gas Industry

 Guidelines for Good Business Practices in the LP Gas Industry
 Good Practice Guidelines for LP Gas Cylinder Management
 Case Study: Kerosene to LP Gas Conversion Programme in Indonesia13
www.worldlpgas.com/resources/publications
3. Details of ADR and other international regulatory and standards documents for LP Gas
3.1. Regulation of activities at the time of cylinder filling

3.1.1. EN 1920 and EN13365 Inspection of cylinders at the time of filling
3.1.2. EN 1439 Procedures for checking LP Gas cylinders before, during and after filling
3.1.3. EN 13952 Filling procedures for LP Gas cylinders
3.2. Cylinder inspection, maintenance and disposal regimes
3.2.1. EN 1440 Periodic inspection of LP Gas cylinders

3.2.2. En 14912 Inspection and maintenance of LP Gas cylinder valves at time of periodic inspection of
cylinders
3.2.3. EN 12816 Disposal of LP Gas cylinders
3.3. Design and construction of cylinders

3.3.1. EN 1442, ISO 4706, ISO 22991, US DOT Code 49 CFR 178 Design and construction of
transportable refillable welded steel cylinders for LP Gas
13
Indonesia successfully transitioned 55mm households over 3 ½ years from kerosene to LP Gas.
3.4. Valve and regulator specifications
3.4.1. EN-ISO 14245 Specifications and testing of LP Gas cylinder valves-self-closing

3.4.2. EN-ISO 15995 Specifications and testing of LP Gas cylinder valves-manually operated
3.4.3. EN 12864 Low pressure non-adjustable regulators for LP Gas
3.4.4. EN 15202 Essential operational dimensions for LP Gas cylinder valve outlet and associated
equipment connections
Copyright
© 2013 World LP Gas Association.
All rights reserved. Neither this publication nor any part of it may be reproduced, stored in any retrieval system or
transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the
prior permission of the publishers.
All information in this report is verified to the best of the authors’ and publishers’ ability. They do not guarantee the
accuracy of the data contained in the report and accept no responsibility for any consequence of their use.
182, avenue Charles de Gaulle - 92200 Neuilly-sur-Seine - France
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Alex EVANS The Global LPG Partnership (USA)

Early-Stage Markets Edition

Table Four - Examples of Typical Cylinder Sizes 46

Figure Two - Example of a Typical LP Gas Cylinder Delivery Truck 19

Figure Five - Example of Cylinder-Filling in a Dangerous Decentralised Filling Centre 28

Figure Six - An Example of a Large BLEVE 29

Figure Eight - Example of an LP Gas Marketer’s Branded Outlet 40

Figure Nine - An LP Gas Registered Distributor’s Trucks in Brazil 41

Figure Ten - Firefighting Water Storage and Pumps in Morocco 53

Figure Eleven - A Cylinder-Filling Carousel at a Filling Plant 53

Figure Twelve - A Failed, Overfilled Cylinder 56

Figure Thirteen - Manual LP Gas Cylinder Valve 58

Figure Fourteen - Self-Closing or Clip-On LP Gas Cylinder Valve 59

Figure Fifteen - Valve with Cap 59

Figure Sixteen - Valve with Anti-Tamper Cap 59

Figure Eighteen - A Cylinder Decanting System 60

Purpose of these Guidelines

Focus: Early-Stage LP Gas Markets

Focus: The Role of LP Gas Cylinders

The Unique and Critical Role of Government

The Role for Well-Qualified Experts

 Inadequate safety puts lives at needless risk,

Fiscal and Pricing Policies Regarding Fuels and Equipment

Worldwide Lessons for Governments and Other Key Stakeholders

The Key Considerations for Increasing National LP Gas Access

The Role of Primary LP Gas Supply (Domestically Produced or Imported)

2.1. Six Main Factors for Government and Stakeholder Consideration

Central to all of these considerations is the national cylinder distribution model.

2.2. Encouraging Cylinder Investment: the Cylinder Distribution Model

The Uniqueness of LP Gas as an Energy Source

Establishing Conditions that Encourage Private Sector Investment in LP Gas Cylinders

2.3. Best-Practice Market Model for Early-Stage LP Gas Markets

3. How is liability and responsibility for the safety of a cylinder enforced?

The First Question: Defining a National Cylinder Distribution Model

The Marketer-Controlled Cylinder Model has the following key characteristics:

Description of the Main Cylinder Distribution Models and their Consequences

 The LP Gas marketer invests in and controls a population of branded cylinders,

 Customers exchange empty cylinders for full cylinders as required.

2.4. Increasing the Number of LP Gas Cylinders in Use

Country Population (Millions) Consumption LP Gas Millions of Number of Cylinders in

Country Population (Millions) Consumption LP Gas Millions of Cylinders Number of Cylinders in

2. Relicensing the existing companies along the LP Gas supply chain,

4. Updating governmental enforcement capabilities.

2.6. Evidence of Market Failure and Potential Failure

Table 3 Benchmarks of Number of Cylinders in Use and Number of Retail Outlets

Figure 1 Typical Cylinder Retail Outlets

Home delivery and metering system in Japan

2.8. How to Ensure a Consistent High Level of Safety for End-Users

 Apply cylinder maintenance and scrapping regimes rigorously,

Figure 2 Example of a Typical LP Gas Cylinder Delivery Truck

Chapter 6 addresses the key issues surrounding LP Gas cylinder safety.

2.10. Encouraging LP Gas Supply Stability

Encouraging International LP Gas Traders to Sell into the LP Gas Market

Adding Cylinders into the Market: Implications of Market

3.1. The Implications of Who Owns the Cylinder

Customer-Controlled Cylinder Model

Marketer-Controlled Cylinder Model

Example: United States of America (USA)

Examples of Countries Successfully Using the Marketer-Controlled Cylinder Model

Example of Having to Transition from the Customer-Controlled to the Marketer-Controller Cylinder

Example of the Customer-Controlled Cylinder Model Hampering Market Development: Haiti

Key Lesson from Haiti’s Experience: