Price of Cooking Gas to Stabilize as State Seeks Price Controls

By Soko Directory Team / Published October 4, 2021 | 9:12 am




KEY POINTS

The common-user berth will allow the government to issue an open tender system (OTS) for Liquefied Petroleum Gas (LPG) imports, prompting the shift to control the prices of cooking gas.


cooking gas

Kenya is looking to start controlling the price of cooking gas after the Kipevu Oil Terminal is completed.

The price controls, once effected, will ease the burdens consumers are going through amid unprecedented increase in taxes on different types of commodities.

The terminal, which will largely have a common user handling all the fuel is set to be completed in December 2021.

The common-user berth will allow the government to issue an open tender system (OTS) for Liquefied Petroleum Gas (LPG) imports, prompting the shift to control the prices of cooking gas.

According to Edward Kinyua, the Petroleum and Gas Director at the Energy and Petroleum Regulatory Authority (EPRA), the industry regulator will set tariffs for handling the gas at the terminal.

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The open tender system will allow the ministry to award one oil marketer the right to import LPS in bulk every month on behalf of the entire industry, much like the case with diesel, petrol, and kerosene.

The absence of a common-user facility at Kipevu has restricted other gas companies from handling the cooking gas imports at the port. Only one company handles over 90 percent of the LPG shipments.

“We are in the process of looking at how to introduce pricing controls for LPG.  Regulation of the LPG prices needs common user facilities under the government and the good thing is the upcoming facility at the Port,” Mr. Kinyua told Parliament.

The construction of the Kipevu Oil Terminal began a little over two years ago. Once completed, it will have the capacity of handling more than four vessels of up to 100,000 metric tons and an LPG line.

The facility will supplement the two other existing terminals in Shimanzi and the old Kipevu terminal, both of which are not fit for handling massive quantities of imported oil and gas.

The State’s shift to LPG price controls will see the cooking gas become more affordable boosting its consumption.

The gas hit a six-year high from July after the Treasury reintroduced a 16 percent value-added tax (VAT) on the commodity.

Currently, a 13-kilogram gas is refilled averagely for 2,400 shillings whereas its 6-kilogram counterpart costs 1,300 shillings.

These prices were affected after the Parliament re-introduced the tax amid opposition from lobbies who wanted it delayed owing to the hard economic times.

Up to 23.9 percent of households in Kenya use LPG for cooking, making it the second-most popular cooking fuel after firewood which stands at 55.1 percent.

Meanwhile, the price of LPG is likely to rise further in November as a result of a surge in global prices for butane and propane.




About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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