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Economy

Rotich gives Sh2bn for subsidised cooking gas

A man walks past gas cylinders on display. PHOTO | FILE
A man walks past gas cylinders on display. PHOTO | FILE 

Poor homes will now acquire six kilogramme (kg) gas cylinders with cooking accessories at a discounted price of Sh2,000, down from about Sh5,000 after the government provided Sh2 billion for the subsidy plan aimed at cutting reliance on kerosene and charcoal.

The cylinders, dubbed Gas Yetu, will be distributed to the poor across the country by State-owned National Oil.

Under the plan, which has been piloted in Machakos and Kajiado counties, the Ministry of Energy will buy about one million new cylinders for distribution.

The Sh2 billion allocation for the year starting July will increase the subsidy scheme kitty to Sh3 billion after Treasury offered the Petroleum ministry Sh1 billion in the current fiscal year.

“We are targeting homes that use firewood, kerosene and charcoal for cooking,” said Andrew Kamau, the principal secretary in the Petroleum ministry. 

“The completed pilot will inform the rollout of the subsidised gas that is intended to increase the uptake of cooking gas by low-income households.”

But it comes at a time when gas prices are on the rise in line with increasing petroleum costs.

Cooking gas prices shot to a 22-month high in April, returning to levels seen before the government removed value added tax (VAT) on the clean fuel.

Official data shows that the cost of refilling a 13-kg gas cylinder rose to an average of Sh2,172 last month, up from Sh2,169 in March and Sh2,083 in April last year.

April’s cost is the highest since June 2016, when Treasury scrapped VAT on gas to cut costs and boost uptake among poor households who rely on dirty kerosene and charcoal for cooking.

Prices stood at an average of Sh2,231 in June 2016, and dropped to below Sh2,000 in October, four month after the scrapping of the 16 per cent VAT.

Gas has become the preferred energy source for households that can afford it in major towns, due to its convenience and because it is cleaner than other cooking fuel.

Industry data shows that gas consumption jumped 25 per cent last year to 189,300 tonnes from 151,700 tonnes last year and 93,000 tonnes in 2013.

The VAT removal on gas was part of the government’s plan to wean rural homes off reliance on toxic firewood, kerosene and charcoal.

Unlike petrol, diesel and kerosene, cooking gas prices are not regulated by the Energy Regulatory Commission and have been left to market forces.

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