Households defy rising gas prices as consumption surges

Kenyans last year defied the increasing cost of cooking gas to increase consumption of the commodity.

The usage of cooking gas among Kenyan households increased 15 per cent over 10 months to October last year to 341,340 metric tonnes from 296,840 tonnes over a similar period in 2023. 

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The increase in the consumption of Liquefied Petroleum Gas (LPG) was despite the rising costs of the fuel, which went from Sh2,700 for a 13-kilogramme refill in July 2023 to Sh3,218 in August last year.

It, however, started to decline towards the end of 2024 and a 13kg refill went for Sh3,147.66 in November.

The rising cost of other cooking fuels also saw consumers lack alternatives, with the cost of charcoal and kerosene having also risen.

The two, although used as alternatives or complementary to LPG, are discouraged because of their effect on human health and the environment.

The cost of charcoal has risen over the last two years to retail at Sh85.30 per kilo in November 2024, according to Kenya National Bureau of Statistics (KNBS) data, from Sh68 per kilo in early 2023.

The cost of kerosene was largely on the decline last year, coming down from Sh200 per litre early in the year to Sh150 towards the end of the year.

It, however, remained high for many who use it for cooking, mostly urban poor. The higher prices for LPG have been attributed to an increase in global demand.  It is also despite the lower taxes on cooking gas introduced by the Finance Act, 2023, which initially had the impact of lowering the retail cost of the fuel.

The Act zero rated Value Added Tax (VAT) on gas from eight per cent. Authorities said the zero-rating of VAT on LPG was a part of government policy to promote the use of clean energy.

Another attempt to cushion consumers from regular spikes in the cost of gas has been an attempt to consolidate imports by LPG dealers in the same manner as other petroleum products.

Cooking gas would then be subjected to price controls, also similar to other fuels. This, however, faced challenges due to a lack of adequate storage facilities. The large facilities in place at the moment are also privately owned. The importation of super petrol, diesel and kerosene has in the past been done through the Open Tender System (OTS), where players would bid to import on behalf of the industry and players offering to do it at the lowest cost got the job.

It is currently being done through the controversial government-to-government deal, which also pools together the industry’s demand. The government has in the recent past said there is increased private sector interest in putting up LPG facilities as well as a planned bulk LPG handling facility by the Kenya Pipeline Company (KPC) at the Kenya Petroleum Refineries Ltd (KPRL) grounds following the conclusion of the transaction to transfer the assets to KPC. 

However, the plant, with a capacity of 30,000 tonnes, is still in its formative stages and could take years before it is operational.

A State-owned common user facility would enable more players to import gas and store it before transferring it to wholesale and retail sites at friendly costs.  Tanzania firm Taifa Gas is also building a 30,000-tonne LPG storage facility, which could increase the current cooking gas handling capacity in Mombasa. The uptake of cooking gas has been on the rise in the last decade, growing from about 93,600 tonnes in 2012 to 360,000 tonnes in 2023.

According to the Energy Regulatory Authority (Epra), the number of LPG refilling plants has increased from nine in 2009 to 134 LPG filling plants currently. 

The growth was partly propelled by the 2009 regulations that established an exchange pool that enabled consumers to refill their gas cylinders at any petrol station or LPG outlet that was a member of the pool. 

This, however, had the unintended consequence of seeing an increase in illegal refilling of cooking gas.

While the exchange was designed to enable the LPG outlets to collect LPG cylinders and hand them over to their brand owners, some unscrupulous players would retain some of the cylinders and illegally refill them. It has recently been disbanded.