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Economy

Kerosene use falls 57pc, gas rises

Kerosene sales fell by more than 50 percent in
Kerosene sales fell by more than 50 percent in the first half of 2019 compared with a year ago, fresh official statistics show. FILE PHOTO | NMG 

Kerosene sales fell by more than 50 percent in the first half of 2019 compared with a year ago, fresh official statistics show.

This comes on the back of increased prices following introduction of an adulteration levy.

Some 93,720 metric tonnes of the fuel, largely used for lighting and cooking in poor homes, were consumed in the January-June period.

This is a drop of 57.16 percent from 218,718 tonnes a year earlier, provisional data from the Petroleum ministry shows. By comparison, uptake of Liquefied Petroleum Gas (cooking gas) rose 3.92 percent in the review period to 126,120 tonnes.

The Treasury slapped a levy of Sh18 per litre in September 2018 following findings of a study by the Energy and Petroleum Regulatory Authority (EPRA) that 70 to 75 percent of paraffin in the market went into adulteration of diesel.

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The enforcement of the “adulteration levy” following the signing into law of Finance Act 2018 in September last year saw retail paraffin prices cross Sh100 a litre for the first time ever.

The data, collated by the Kenya National Bureau of Statistics (KNBS), indicate that a litre of paraffin averaged Sh101.46 between January and June, Sh9.09, or 9.83 percent, more than Sh92.38 a year earlier.

The data further shows that diesel consumption, largely used in transportation and farming, were nearly flat, growing a marginal 2.14 percent to 1.114 million tonnes in the first six months of the year compared with the same period in 2018.

The introduction of the levy was expected to slow down uptake of kerosene and increase sales of diesel.

But the Petroleum Institute of East Africa (PIEA) —the professional body for the oil and gas industry in the region — argued in April that uptake of diesel had been partly hurt by reduced cargo transportation by road from Mombasa port to Nairobi.

“The equalisation of (taxes on) diesel and kerosene has impacted on the drop in demand for kerosene,” PIEA general manager Wanjiku Manyara said in April.

The Treasury had targeted some Sh9.8 billion from adulteration levy on paraffin, the then Treasury Secretary Henry Rotich (now suspended) had told the National Assembly.

The Energy ministry had lined up a subsidy programme on cylinder prices for low-income households as part of wider plan to expand adoption of clean energy as Kenya phases out the use of kerosene for cooking. The Sh3 billion plan has since been abandoned, as a crafty cartel is said to have hijacked the low-cost cylinders and sold them to illegal refillers.

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