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Economy

Households feel the heat of rising gas prices

Cooking gas
Cooking gas cylinders for sale. FILE PHOTO | NMG 

The cost of cooking gas has shot up by up to Sh25 per kilogramme in some outlets, driven by increased demand for liquefied petroleum gas (LPG) in global markets.

The increase comes against the background of increased consumption of cooking gas locally in the wake of the extension of the logging ban and the month-on-month increase in the cost of kerosene, used by poor households for cooking and lighting.

A spotcheck by Business Daily found that traders were quoting between Sh900 to Sh1,200 to refill a 6kg cylinder, representing a rise of between Sh15 to Sh25 per kilogramme.

The cost of the 13kg cylinder varied by near-similar margins depending on the retailer.

The increase is set to hurt household budgets, especially considering their spending over the December festivities and the costs associated with taking children back to school. Whereas most schools opened last week for the new calendar year, Forms One will be reporting this week.

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Various dealers interviewed by Business Daily said there was a sudden increase in the price of LPG in the international market due to the low temperatures experienced in winter in Europe and North America, which increase gas consumption for heating. High LPG consumer markets such as India experienced price increases of up to 20 percent as early as January 1.

“We could have started late last year but the available stock was still sufficient since lots of cooking gas had been shipped in for the December festivities when consumption usually goes up,” a Mombasa-based dealer told Business Daily.

GLOBAL DEMAND

The Energy and Petroleum Regulatory Authority (EPRA) had projected shocks associated with the US-Iran tensions, but had not specified the degree of the effects.

Pavel Oimeke, the EPRA director-general, said the increase in LPG prices was normal during winter as global demand usually goes up.

“It usually happens due to heightened demand and more households use it for heating,” Mr Oimeke said.

In Kenya, the price of LPG is not regulated like other petroleum products hence the variance in prices from one dealer to another. The government is yet to come up with a common storage facility to allow for an open tender system (OTS) as happens with petrol, diesel and kerosene.

There were fears in the local market that traders and marketers were planning to increase prices after the new Liquefied Petroleum Gas Regulations 2019 took effect from January 1.

The EPRA, however, warned against price reviews, noting that the compliance cost of the new law was negligible.

According to Mr Oimeke, the regulator had designed market correction strategies to insulate consumers from traders who may use the new regulations as an excuse to increase cooking gas prices.

Part of the strategy involved licensing more players as one way of discouraging monopoly and creating competition that would see those pricing high sell less and pushed out of the market naturally or be forced to lower their prices.

“EPRA has registered 170 wholesalers and 1,843 retailers,” said Mr Oimeke. “However, as the enforcement of the Liquefied Petroleum Gas Regulations of 2019 commences, there has been a surge in the number of applications received and processed.”

Regulations require dealers to provide consumers with detailed receipts on purchase of cooking gas, as well as allow them to claim refunds on the cylinder deposits when they chose to switch brands. ]The after-sales receipts should indicate both the retailer’s and the consumers’ telephone numbers, address of the retailer, net weight and serial numbers of the cylinders among other details that can be used to trace its source.

The regulations that banned the free cylinder pool now aim to make cylinder brand owners fully responsible for the quality of cooking gas with heavy emphasis placed on consumer protection.

Oil marketers will also be required to maintain a list of their authorised filling agents, wholesalers, retailers and cylinder requalification agents, serial numbers or quick response codes or any other appropriate technology to ease purchase, tracing and quality checks.

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