Firm fuels ‘kadogo’ economy with Pima Gas dispenser

Premier Gas general manager Michael Momanyi during the launch of Pima Gas in Nairobi, on Tuesday February 7 2012. Diana Ngila
Premier Gas general manager Michael Momanyi during the launch of Pima Gas in Nairobi, on Tuesday February 7 2012. Diana Ngila 

A cooking gas dispenser has been launched that will allow consumers to refill for as little as Sh50.

Premier Gas, a cooking gas dealer, says the new product will shield the users from health and environmental hazards associated with charcoal use.

The firm has developed a mobile calibrated LPG pump that allows for partial refills from a minimum of Sh50.

The gas will be sold through one kilogramme cylinders in the market with a refill costing Sh300.

Data from the Kenya National Bureau of Statistics shows the country consumed 61,400 tonnes of cooking gas last year, translating into a per capita consumption of 1.59kg. This is below Africa’s average of three kilogrammes per person.

“Refilling will make it easy for consumers to purchase and use LPG. We aim to pull biomass and kerosene users to start using LPG,” said Michael Momanyi, the general manager of Premier Gas at the launch in Nairobi yesterday.

The empty one kilogramme cylinder will retail at Sh2,000. Currently, the smallest gas cylinder in the market has a capacity of 3kg.

The Pima Gas initiative comes when the price of cooking has been rising, occasioned by erratic supply caused by inadequate storage infrastructure.

Gas shortage saw the price of refilling a 13kg cylinder go up from an average Sh2,500 in the first half of 2011 to a peak of Sh5,000 in November/December.

A spot check by Business Daily yesterday established that the 6kg and 13kg LPG retail at Sh1,550 and Sh3,300 respectively.

The International Finance Corporation (IFC), the World Bank private sector lending arm, has invested $2million in the venture, securing a 20 per cent equity in Premier Gas.

“Our involvement in clean energy initiatives by supporting products such as Pima Gas will help reduce health risks and greenhouse emissions,” said Ms Aida Kimemia, the principal investment officer at the IFC.

IFC said low penetration of LPG portends a huge market especially for the bottom of the pyramid consumers who cannot afford a complete refill.

The moveable LPG unit has a storage capacity of 25kg. Pima Gas will retail at Sh300 per kilogramme but partial refills starts from Sh50.

Premier Gas is constructing a bulk LPG filling plant and storage facility with a capacity of up to 200,000 tonnes to ensure a steady supply of the commodity.

Construction of the facility in Nairobi’s Industrial Area began last year and is due to be completed in the next three months.

The African Gas and Oil Company is also building a 28,000 tonne LPG storage facility adjacent to the port of Mombasa.

Pima Gas has started selling in Nairobi, focusing on the low end mass market.

The firm has installed 15 LPG mobile units in Embakasi and Pipeline estates.

The introduction of partial LPG cylinder refills will help minimise environmental degradation due to wood and charcoal harvesting.
It is also a health bet against Acute Respiratory Infections (ARI) caused byfuel smoke.

VAT Bill
In 2005, Finance minister David Mwiraria removed value added tax on cooking gas with a view to reduce use of biomass fuel especially firewood and charcoal. It is estimated that up to 80 per cent of Kenyan households depend on biomass fuels for cooking and heating.

However, LPG cylinders and other appliances like valves still attract a 16 per cent Value Added Tax as well as 25 per cent import charges.

The proposed VAT Bill has removed LPG from the list of commodities that are exempt from paying the tax, meaning consumers will pay more for cooking gas should the Bill come into law.

Unlike other petroleum products whose prices are regulated by the Energy Regulatory Commission, LPG prices are determined by market forces of demand and supply.