Hope for cheaper cooking gas on global prices fall

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Cooking gas on display in Nairobi's Pipeline Estate on August 20, 2023. PHOTO | DENNIS ONSONGO | NMG

Global prices of cooking gas have dropped to the lowest level in more than two years amid increased production, giving hope of affordable supplies of the commodity in Kenya.

Data from Trading Economics —a global markets data firm — shows prices of propane, commonly referred to as liquefied petroleum gas (LPG), stood at $0.694 (Sh103) per gallon on Wednesday.

This compares favourably to a unit price of $0.9 (Sh133) on February 27, 2023, marking a drop of 29 percent in six months.

The price of propane had fallen even further to $0.5844 in early July this year, making it the lowest since November 2020, a period of nearly three years.

The steady drop in global prices in recent months, after reaching a 10-year high in February 2022, is already being felt locally with dealers cutting prices for both the six-kilogramme and 13-kilogramme gas-filled cylinders.

According to the Kenya National Bureau of Statistics (KNBS), a 13kg cylinder that was refilling at Sh3,106 in September 2022 was refilling at Sh2,795 last month, a drop of about 10 percent.

A spot check on Friday showed TotalEnergies was refilling the 6kg cylinder at Sh1,380 and the 13kg one at Sh3,160 while Pro Gas was refilling at about Sh1,350 and Sh3,090 respectively.

On February 2, 2023, TotalEnergies Kenya was refilling the smaller cylinder at Sh1,540 and the bigger one at Sh3,330 while Pro Gas was refilling at Sh1,500 and Sh3,000.

As cooking gas prices decline, petrol, diesel, and kerosene are retailing at record high prices, while electricity prices were raised by as much as 63 percent in April through new three-year tariffs.

Further, the Finance Act of this year zero-rated value-added tax (VAT) on cooking gas, in what has resulted in lower prices.

The Finance Act, 2022 had also amended the VAT Act to halve the tax to eight percent from 16 percent.

“It is expected that this will reduce the cost of LPG and positively impact the climate through the use of clean energy,” said tax experts at KPMG.

“Input VAT incurred by the supplier of LPG will now be claimable.”

Regulation plan

Consumption of cooking gas has risen steadily in Kenya over the past decade driven by a decrease in prices coupled with an increase in the prices of alternative sources of energy such as firewood, charcoal, and kerosene.

Data from the Energy and Petroleum Regulatory Authority shows consumption hit 373,865 metric tonnes in 2021, a 13.9 percent increase from the 320,909 metric tonnes recorded in 2020.

Kenya is mulling regulating cooking gas prices in a similar manner that it regulates fuel, aimed at stabilising prices.

Every mid-month, Epra releases new fuel prices under the price capping regime.


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