Energy regulator to start publishing cooking gas prices

Gas Cylinders. FILE PHOTO | NMG
Gas Cylinders. FILE PHOTO | NMG  

The Energy Regulatory Commission (ERC) will begin publishing cooking gas prices to enable consumers push cash-hungry dealers to lower the cost of the commodity.

The publishing of the indicative prices across counties will come ahead of the plan to impose price controls on cooking gas, similar to those introduced on diesel, petrol and kerosene costs in 2010.

The ERC has delayed plans to control gas prices awaiting an upgrade of the LPG storage and handling facilities for issuance of single gas tender commonly referred to as the open tender system (OTS).  

“In the meantime ERC can and should monitor the LPG (liquefied petroleum gas) market by publishing indicative LPG prices,” the Ministry of Energy says in a report.

The ministry points out that gas prices have remained high despite removal of value added tax (VAT) last year and relatively lower prices of crude oil – from which LPG gas is derived.

Gas prices (13-kg cylinder) dipped below Sh2,000 on average last July for the first time in many years after the Treasury removed VAT on the product to cut costs and boost uptake among poor households.

Prices have, however, on the up, putting gas out of reach of most poor homes.

Refilling a 13-kg cylinder cost an average of Sh2,094 in September, a three-per cent rise in the past year, according to the Kenya National Bureau of Statistics (KNBS).

Price controls

The proposed indicative prices are expected to be in place until the energy regulator begins imposing the price controls.

Unlike the fuel prices, which are adjusted on 15th of every month and stay in place for one month, there will be no penalties for those in breach.

Marketers risk a fine of Sh1 million or withdrawal of the licence or both if found selling fuel above the ERC caps.

Under the OTS, the ministry will award one oil marketer the right to import gas in bulk every month on behalf of the entire industry, enjoying huge discounts, like is the case with diesel, petrol and kerosene cargoes.

A 2011 law returned price controls of any essential commodity, after the practice was abandoned in the 1990s in favour of economic liberalisation.

But the Treasury Cabinet Secretary must first issue a gazette notice to declare any goods to be essential commodities and determine the maximum prices.

This happened in May when flour prices were capped at Sh90.

Official data shows that gas consumption jumped 53 per cent in the first half of the year to 34,563 metric tonnes, compared to 22,608 metric tonnes in a similar period last year.

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.

Oil marketers have been pushing for more rigorous checks on unlicensed gas operators, whom they accuse of undercutting the market through irregular refilling.

The energy regulator in 2010 started controlling prices for diesel, petrol and kerosene to cushion consumers from high prices, blamed on cartel-like behaviour among dealers.

Gas was left to the market forces of supply and demand.