Loading News Article...
We're loading the full news article for you. This includes the article content, images, author information, and related articles.
/
/
We're loading the full news article for you. This includes the article content, images, author information, and related articles.
Kenyan households continue to grapple with elevated cooking gas prices despite government interventions and a strengthening shilling, raising questions about market inefficiencies and the effectiveness of current policies. The Energy and Petroleum Regulatory Authority (EPRA) is set to introduce price controls to address these concerns.
Kenyans are still facing high costs for liquefied petroleum gas (LPG), commonly known as cooking gas, even as the government moves to implement new regulations aimed at stabilising prices. The Energy and Petroleum Regulatory Authority (EPRA) has announced plans to introduce maximum retail prices for cooking gas, effective October 2025, to shield consumers from market volatility. This initiative includes designating private LPG terminals as interim common-user facilities until the Kenya Pipeline Company completes a 30,000-tonne public LPG terminal in Changamwe.
Despite the removal of Value Added Tax (VAT) and other levies, retail prices for a 13-kilogramme cylinder have remained largely unchanged, averaging around KSh 3,300 at major oil marketers like Vivo Energy, Rubis, and TotalEnergies Marketing Kenya. This contrasts with a drop in wholesale prices at the Mombasa port, which fell from KSh 100 to KSh 88 per kilogramme. The discrepancy has led to accusations that oil marketing companies are not passing on cost reductions to consumers.
The high cost of cooking gas has been a persistent challenge for Kenyan households. In March 2024, the average price for a 13-kilogramme cylinder reached KSh 3,231.84, an all-time high, despite the government's efforts to lower costs, including the scrapping of the 8 percent VAT. This surge followed a period where prices had already increased significantly, with a 13kg cylinder costing around KSh 2,500 a few months prior to a KSh 3,000 price point in early 2024. The reintroduction of a 16 percent VAT on LPG in 2021 had previously led to a decrease in consumption, pushing households towards cheaper, but more polluting, alternatives like charcoal and firewood.
The government's commitment to clean cooking solutions by 2030, with LPG accounting for 35% of the total energy mix, is undermined by these high prices. The reliance on imported LPG, primarily from the United States, makes Kenya vulnerable to global market fluctuations and currency depreciation.
The government has implemented several policy measures to support access to LPG. In June 2022, the VAT on LPG was halved from 16% to 8%, and by June 2023, cooking LPG was entirely exempted from VAT. Additionally, a subsidy scheme was initiated in July 2022 to distribute 60,000 six-kilogramme cylinders.
A key policy shift is the planned implementation of an Open Tender System (OTS) for LPG imports, similar to the system used for petrol, diesel, and kerosene. This system aims to increase competition among importers by awarding contracts to the lowest bidder, thereby reducing landing costs and retail prices. The Petroleum (Operation of Common User Petroleum Facilities) Regulations 2025 now allow private LPG terminals to be designated as common-user facilities, a crucial step towards implementing the OTS.
Consumers have expressed frustration over the persistent high prices. Many households, particularly in urban slums, have been forced to revert to using charcoal and firewood, despite the associated health and environmental risks. This shift is concerning given the increased lobbying for cleaner energy to reduce respiratory illnesses.
Oil marketing companies have been criticised for not passing on the benefits of tax cuts and falling global prices to consumers. EPRA Director General Daniel Kiptoo has acknowledged that the lack of price regulation for LPG, unlike other petroleum products, allows multinational firms to set prices as they wish.
The persistently high prices of cooking gas pose significant risks to public health and the environment. The reversion to biomass fuels like charcoal and firewood contributes to indoor air pollution, leading to respiratory diseases, and accelerates deforestation. This also undermines Kenya's commitments to clean energy and climate goals.
Economically, the lack of competition in LPG importation has allowed a few players to control the market and potentially overcharge consumers, leading to excessively high profits for dealers, distributors, and retailers. This market distortion has cost Kenyans billions of shillings in inflated prices.
A major point of contention is why oil marketing companies have not adjusted their retail prices downwards despite tax exemptions and a strengthening Kenyan shilling against the US dollar, which should reduce import costs. EPRA's report in September 2024 highlighted that disproportionately high margins earned by LPG dealers, distributors, and retailers, representing approximately 32% of the total price, contribute to the high costs.
The effectiveness of the proposed Open Tender System in genuinely fostering competition and lowering prices remains to be seen. Stakeholders are urging clarity on the timelines, costs, and safeguards associated with its implementation.
The implementation and impact of EPRA's new regulations and the Open Tender System will be crucial to watch. The extent to which these measures genuinely increase competition, reduce consumer prices, and prevent market exploitation will determine their success. The government's ability to enforce these regulations and ensure compliance from oil marketing companies will be key to achieving affordable and accessible cooking gas for all Kenyans.
The ongoing discourse around cooking gas prices is closely linked to broader issues of energy policy, cost of living, and environmental sustainability in Kenya.
