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Opinion & Analysis

EDITORIAL: Price controls bid flawed

GAS VENDORS IN NYERI. FILE PHOTO | NMG
GAS VENDORS IN NYERI. FILE PHOTO | NMG 

The Energy Regulatory Commission (ERC) has indicated that it will impose price controls on cooking gas as it seeks to make the commodity more accessible to all Kenyans.

The agency is hoping to arrest high LPG (liquefied petroleum gas) prices that have remained in place despite lower cost of crude and removal of value added tax (VAT) last year.

While the ERC’s intentions are laudable, it is not yet clear how it plans to enforce price controls in a sector where the players have gotten used to relying on market forces to determine cost.

The agency also has to be careful not to distort market dynamics of demand and supply in its bid to avail the clean energy to poorer households.

The move is also curious given that it comes at a time when the regulator had indicated that it plans to do the exact opposite with the petroleum market.

The ERC should look into exploring less disruptive forms of policy intervention to stem rising gas prices, such as tax exemptions, as enforcing controls may affect the quality of LPG available to consumers and discourage suppliers from freely serving the market.

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