Relief for users as one-year surge in gas prices cools off
A cooking gas outlet in Nairobi. Retailers are selling a 13-kilogramme cylinder at between Sh3,050 and Sh3,100 .File
What you need to know:
The biggest monthly gain of 10 per cent came between August and September 2013 when the new VAT law introduced tax on gas and cylinders.
A sustained one-year surge in the cost of gas has cooled off with prices holding at slightly under Sh3,100 for three consecutive months.
Data from the Kenya National Bureau of Statistics (KNBS) shows the average price of a 13-kilo gas cylinder at the end of May 2014 stood at Sh3,075 — having previously gained 20 per cent over the July 2013 price of Sh2,564.
The biggest monthly gain of 10 per cent came between August and September 2013 when the new VAT law introduced tax on gas and cylinders. But retail outlets, including petrol stations, are currently selling the 13-kilogramme cylinder of gas at between Sh3,050 to Sh3,100.
The stability came as a relief as higher gas, kerosene, electricity and charcoal prices had combined to strain household energy budgets, which the consumer price index shows have gone up by seven per cent over the past one year.
“Between May and June 2014, the housing, water, electricity, gas and other fuels index increased by 0.7 per cent. This was mainly due to increase in prices of kerosene, charcoal, electricity and rent,” said KNBS in the June consumer price index and inflation report.
The electricity cost tops the list. Charcoal price for a four kilogramme tin stands at Sh73.27, according to KNBS, reflecting a one-year increase of Sh3. In a bid to encourage more households to use gas, the Ministry of Energy is planning to increase tax on kerosene, which has for a long time attracted low taxation in comparison to other fuel products, hoping this will encourage consumers to use gas for cooking.
Kerosene taxes
The ministry estimates that Sh7 billion could be raised annually from the kerosene taxes. The plan calls for exemption of gas from taxes, largely blamed for the steep price rise over the past one year.
Industry experts though believe the move will not have a big impact on gas consumption.
“There is not much relationship between kerosene and LPG consumption as LPG is mostly used by middle and upper income households. Kerosene users are mostly peri-urban low income households who alternate with charcoal. Increasing kerosene taxes will mean shifting to charcoal,” said Petroleum Focus managing director George Wachira.
The ministry sees the tax on kerosene as likely to act as a foil against rogue oil marketers who adulterate diesel and petrol with kerosene to improve their margins. Mr Wachira, however, said the regulator should improve enforcement of checks against adulteration rather than load costs on consumers.
