LPG use up in first half defies high price


Gas cylinders on display at Nairobi’s Pipeline Estate on April 2, 2023. PHOTO | LUCY WANJIRU | NMG

Cooking gas, commonly referred to as liquefied petroleum gas (LPG), use jumped seven percent in the first half of this year defying price rises that were expected to depress demand.

Official data shows homes and businesses used 171,720 tonnes of LPG between January and June from 159,900 tonnes in the same period last year.

The rise defied price increments of the commodity as the cost of the 13-kilogramme container averaged Sh3,100 while that of six kilogrammes went for an average of Sh1,400.

Prices of LPG have been on a steady rise from last year driven by high costs of crude globally and heavy taxation.

The data shows that the LPG consumption in May is the single highest uptake of cooking gas in a month at 3,106 tonnes. This, however, slowed down marginally to 3,036 tonnes the following month.

High prices were projected to derail the government’s efforts to grow the number of Kenyans using the commodity to cook in a bid to transition from dirty fuels such as kerosene, charcoal, and firewood.

Consumption of cooking gas is expected to jump between July and the end of this year in the wake of price drops following tax reduction changes effected through the Finance Act, of 2023.

The Finance Act, of 2023, which came into force from July 1 exempted cooking gas from the eight percent Value Added Tax (VAT), the 3.5 percent Import Declaration Fees, and the Railway Development Levy of two percent.

The measures saw prices of cooking gas drop below the Sh3,000 mark for the first time in a year to an average of Sh2,740 for the 13-kilogramme container while prices for the six-kilogramme cylinder dropped to an average of Sh1,170.

LPG is the second most popular fuel for cooking with 24 percent of Kenyan homes using it, after firewood.

The Cabinet on Monday revealed fresh plans to further lower the prices through the removal of the Petroleum Development Fund Levy at a rate of Sh0.40 per kilogramme.

The six taxes on the cooking gas cylinders are also targeted for a review in the latest move where the State targets to have 22 million Kenyans drop dirty fuels in favour of cooking gas.

“Approximately 22 million people will be transitioned from the use of biomass and kerosene to LPG, which is cleaner and hence helps in reduction of premature deaths associated with indoor pollution,” read a dispatch from the Cabinet.

Besides fresh tax cuts, a combination of a State-owned common-user berth for handling imported LPG, entry of more private firms, and construction of handling facilities in the hinterland are expected to lower prices and boost consumption.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.