Hass seeks edge over rivals with launch of gas meters
A cooking gas outlet. Hass seeks a higher market share with installation of gas meters on its cylinder. file
Energy vendor Hass Petroleum has become the first marketer to instal gas-level meters on its cylinders as it seeks to penetrate the highly competitive market it entered in July.
The Hass meter will enable consumers to tell the amount of gas left in the cylinder, saving users the embarrassment of the fuel abruptly running out. It is attached to the regulator meaning users keep it when they exchange cylinders.
“We expect to grow our sales with this technology since we are the only one offering the service,” said the Hass Petroleum head of sales Mahmud Abdi Aden Monday.
Until five months ago, Hass only participated in the import market which is dominated by Shell and Total. Analysts say that fuel companies are banking on liquefied petroleum gas (LPG) sales to boost revenues since kerosene, petrol and diesel margins have been squeezed by the Energy Regulatory Commission (ERC) price controls.
“It has become important they look for other options to boost revenues since they are blaming the ERC for not taking all factors into account,” said Eric Musau, an analyst at Standard Investment Bank.
Total Kenya has consistently attributed its poor performance on price caps.
Shell controls 28.5 per cent of the gas market with Total following at 22.3 per cent. OilLibya, KenolKobil, Hashi, Cape Suppliers and Addax control 18.3 per cent, 11.5 per cent, 5.1 per cent, 3.3 per cent, 2.8 per cent respectively. Hass controls 2.1 per cent of the market share.
Mr Aden said that Hass engaged in the bulk gas distribution before it broke into the retail market. Hass used to import the gas and sell to other players such as Shell.
Domestic consumption of LPG increased 55 per cent in quarter three of this year to 25,000 tonnes, compared to the same period in 2011, fuelled by lower prices and improved supply.
This saw gas prices correct from last year’s high of more than Sh3,000 for the 13kg cylinder to about Sh2,600.
Competition in the cooking gas retail market went a notch higher when the National Oil Corporation of Kenya early this year launched a two-kilogramme cylinder targeting the low-end market.
Demand for LPG has also been increasing as the rising economic growth in the past 10 years pushed many into the middle class.
This reduced reliance on charcoal and firewood whose prices have risen as population surged, giving gas distributors a larger market.
The company has invested Sh500 million in the purchase of the cylinders and an undisclosed figure on the gas-filling plant and gas imports. Other new entrants into the LPG market include Addax Kenya, which is investing Sh420 million.
Addax managing director Christian Callede had earlier said the company is setting up a gas filling plant worth $5 million.
This comes as ERC director general Kaburu Mwirichia was quoted saying the regulator was considering introducing gas price caps.
During the last month’s fuel price caps, the commission said that the move was meant to ensure fair prices for consumers.
