Cooking gas prices in sharpest fall since 2010 after VAT is removed

Cooking gas prices have dipped below Sh2,000 for a 13-kilogramme cylinder following the removal of value added tax (VAT) on the commodity, marking the lowest price levels since 2010.

Vivo Energy, dealer of Afrigas brand, is selling gas in a 13-kg tank at Sh1,980 in Nairobi and Sh1,840 in Mombasa port city. Prices at State-owned National Oil are also below Sh2,000.

Treasury secretary Henry Rotich on June 8 announced the removal of VAT on liquefied petroleum gas (LPG) to cut reliance on toxic firewood, charcoal and kerosene for cooking.

Total Kenya, which enjoys the largest market share for cooking gas, is charging Sh2,200 for a 13-kilogramme cylinder in the capital city while KenolKobil is selling its K-gas brand at Sh2,100.

Total Kenya’s gas market share stood at 22 per cent in the three months to March, Kenol (12 per cent) and Vivo, which owns the Shell brand, has a 11 per cent stake.

Vivo is keen to use pricing to grow market share in what could spark a price war that will ultimately benefit consumers.

Cooking gas prices for the 13-kg cylinder have dropped by about Sh1, 000 over the past two years on cheaper crude oil, data from Kenya National Bureau of Statistics (KNBS) shows.

Unlike petrol, diesel and kerosene, cooking gas prices are not regulated by the Energy Regulatory Commission (ERC) and have been left to market forces.

Gas has become the preferred energy source for households, especially in major towns, due to its convenience and because it is cleaner compared to other sources of energy used for cooking.

Oil marketers have been pushing for more rigorous checks on unlicensed gas operators, whom they accuse of undercutting the market through irregular refilling.

Through the Petroleum Institute of East Africa, the marketers claimed last August that seven out of 10 gas cylinders in the market are illegally refilled, posing danger to users.

Total charges Sh1,020 for a 6-kg cylinder, KenolKobil (Sh990) and Sh940 for Vivo.