Cooking gas prices have fallen to a 22-month low in the Kenyan market, giving households the much-needed relief in the wake of a high cost of living.
This is on the back of the new tax measures contained in the Finance Act 2023, relatively fair global LPG prices and eased up freight costs which have fallen by up to 50 per cent.
A spot check by the Star yesterday showed prices have dropped by up to 30 per cent compared to same period last year, based on the average costs captured in the Economic Survey 2023.
Retail prices have dropped to rates last seen in June 2021.
Last year, the 6-kg cooking gas touched a high of Sh1,600 while refilling the 13-kg cylinder went as high as Sh3,300, with an average annual price of Sh2,999.
These prices have since dropped, despite disparity in the asking price between major Oil Marketing Companies and small traders.
Small dealers, predominantly in estates, are selling (exchanging) the common 6-kg cylinder at an average Sh1,000, which is an average Sh500 drop compared to last year.
The 13-kg kilogramme cylinder is going for an average Sh2,200 at estate retail shops, 15kg at Sh2,600 while the 50kg, mostly used for commercial purpose is going for an average Sh7,350.
Prices at major OMCs are however high with a 6-kg refill at Shell (Vivo), the Afrigas brand is going for Sh1,190. With cylinder, it will cost one Sh2,200.
The 13-kg cylinder is asking Sh2,780 for a refill, about Sh500 more compared to the various brands being sold by small dealers.
Ola Energy is retailing its 6-kg Mpishi gas at Sh1,200 while the 13-kg is going for Sh2,530.
Total’s 6-kg is going for Sh1,280 while the 13-kg cylinder is exchanging at a retail price of Sh2,900.
The price differences comes with operating costs for different companies and dealers in the market, where LPG is not state-controlled like other fuel products of super, diesel and kerosene.
Nevertheless, Energy Petroleum Regulatory Authority has attributed the drop to the removal of taxes, according to director-general Daniel Kiptoo.
During his budget speech in June, National Treasury CS Njuguna Ndungú said the government had instituted immediate interventions, aimed at providing short-term solutions to the high cost of living, while at the same time building a momentum for long-term interventions.
This included policy revision in the energy sector, with the aim of developing and diversifying the market further “ by improving sourcing and supply of cooking gas that inevitably had resulted in high costs that also drive domestic inflation.”
He proposed the zero rating of LPG products from VAT to lower the cost of LPG in order to make it affordable, taking away the previous eight percent tax.
The government has also exempted LPG from Import Declaration Fee and Railway Development Fee to lower cost and promote the uptake of LPG.
Demand for Liquefied Petroleum Gas declined by 10.1 per cent to 338,800 tonnes in 2022, the Economic Survey indicates, from 371,400 tonnes the previous year.
The government is currently in the process of working on modalities of distributing LPG cylinders fitted with grills and burners within Nairobi, where the beneficiary pool has been developed awaiting deployment.
The energy ministry will implement the project through National Oil Corporation of Kenya.
It is keen on piloting metered gas through Cylinder Smart Metering (CSM) devices from 6-Kg cylinders into 2-burner table-top cookers via PAYGO system.
Meanwhile, the full entry of Tanzania’s Taifa Gas into the Kenyan market is expected to help increase competition and lower gas prices in the market , which has been dominated by the likes of Africa Gas and Oil (AGOL) for years.
Taifa Gas broke ground at the Dongo Kundu Special Economic Zone next to the Port of Mombasa in February.
The company is investing about Sh16.4 billion in a LPG import, storage and distribution plant, at the 3,000-acre SEZ.
It has been supplying LPG for domestic, commercial and industrial use and has been feeding the Kenyan market by road.
Tanzania’s businessman Rostam Aziz, the chairperson of Taifa Gas Investment SEZ Limited, is now expected to be a major player, if not a top distributor in the country, once the investment in Mombasa is complete.
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