Markets & Finance

Cooking gas price edge below Sh3,000

gas

A petrol attendant arranges LPG cylinders. Prices have dropped since April. PHOTO | FILE

Cooking gas prices are heading below Sh3,000 after four months of decline, providing relief to households grappling with inflation rate now at a nine-month high.

The average price of a 13-kilogramme gas cylinder was listed by the Kenya National Bureau of Statistics as Sh3,042.80 (Sh234 per kilo) at the end of July, but some supermarkets and small retailers have gone as low as Sh2,850 while petrol stations remain at between Sh3,000 and Sh3,050.

Gas prices have shown a steady but marginal decline from a high of Sh3,098 in April. Gas prices in the international market have largely remained flat in the intervening period.

While the recent reversal of price rise will be seen as a positive development, the current charges are still 18 per cent higher than a year ago, reflecting the increase caused in part by the introduction of VAT on LPG in September 2013.

The reduction comes at a time when the regulator and major industry players have recently raised the alarm over high prices and illegal selling and branding.

READ: Relief for users as one-year surge in gas prices cools off

The Petroleum Institute of East Africa (PIEA) has complained of illegal gas operators, pointing out that such retailers under-fill their cylinders and evade taxes, which allow them to offer lower prices.

“Seven out of 10 LPG cylinders in the market are either illegally re-branded, filled illegally, have been tampered with or their contents do not meet stipulated requirements,” said PIEA chairman Polycarp Igathe in a statement.

The government targets to increase the use of gas in households as opposed to dirty sources like kerosene and charcoal.

The Energy regulatory Commission (ERC) has outlined plans to raise the tax on kerosene, which it says will encourage more Kenyans to use the more environmentally friendly gas. This will as well reduce adulteration of fuel with kerosene.

ERC has been mulling over central LPG import system similar to the Open Tender System used to import other petroleum products.

Market players say while such a system would allow smaller players to access products at a fairer price it may not stabilise rates because these are determined by the international market that is beyond the control of local players.

“OTS can only ensure we get the best available price on the day of purchase,” said Oil & Energy Services chief executive Mwendia Nyaga.

Lack of storage capacity has in the past deterred the bulk importation of gas but ERC is betting on such a facility at the Coast which has been put up by Africa Gas and Oil Ltd (AGOL) with a capacity of 14,000 metric tonnes.

Kenya Pipeline Company (KPC) also plans to put up a gas storage and bottling plant in Kajiado on 80 to 100 acres plot.