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Cooking gas prices start rising after 10-month steady decline

A cooking gas outlet.  PHOTO | FILE
A cooking gas outlet. Gas prices have gone up, threatening to bring to an end the relief consumers have enjoyed against high household energy prices this year. PHOTO | FILE 

The price of cooking gas has gone up over the past three weeks, threatening to bring to an end the relief consumers have enjoyed against high household energy prices this year.

Retailers at petrol stations are selling a 13-kilogramme cylinder of gas at an average of Sh2,550 in Nairobi. At the end of July the canister was going for an average of Sh2,376. The cost of refilling a six-kilogramme cylinder has also risen from Sh900 to Sh1,000.

The price of gas is picking up after 10 months of steady decline that saw consumers pay 24 per cent less for the 13 kilogramme cylinder in July compared to Sh3,111 in September 2014, which represented a 32-month high price.

Kenya Independent Petroleum Dealers Association (Kipeda) vice chairman Keith Ngaruchi said some marketers could be hoarding to improve their margins. Overland supply from regional sources in like Tanzania may also be constrained after reports of some depots being shut for maintenance.

“Normally when the price of petrol goes up, some people start hoarding gas supplies as they anticipate prices may go up as well. Once the industry was liberalised and cylinders standardised, the sourcing has also been opened up for different players,” said Mr Ngaruchi.

The pricing of gas has been bothering the Energy Regulatory Commission (ERC), which, under current laws, lacks the mandate to control prices.

The movement of gas prices has tended to be out of sync with that of other petroleum products, a fact that is also blamed on an inefficient supply system.

The ERC has said price controls for gas cannot happen until new regulations are included in the Energy Act.

The agency has said regulating gas prices will ultimately require an open tender system (OTS) for imports as is the case of oil imports.

The bulk storage facility at the Coast put up by Africa Gas and Oil Ltd (Agol) with a capacity of 14,000 metric tonnes for cooking gas is set to facilitate the bulk OTS imports. It has been commissioned and licensed.

Informal resellers

The fall in gas prices came amidst huge competition spawned by the proliferation of informal resellers. Mainstream oil marketers have been pushing for more rigorous checks on unlicensed gas operators, whom they accuse of undercutting through irregular refilling.

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

Independent sellers, while conceding that there are unauthorised gas traders, cautioned against being branded illegal, saying the multinational marketers fear their market share is under threat.

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