Higher cooking gas prices to hit Kenyan households hard

The cost of living for Kenyan households will rise further as the prices of liquefied petroleum gas (LPG) increased to the highest levels ever on Monday, squeezing consumers already struggling with high food prices.

Retail prices for refilling a 6kg gas cylinder have shot to Sh1,560 and a 13kg cylinder to Sh3,340, from about Sh1,400 and Sh2,950, respectively, in February.

The prices, the highest ever and representing an increase of over 60 per cent compared with March 2021, will bring more pain to low-income households in particular, who rely on LPG for cooking and may revert to using dirty fuels for cooking.

The Nation confirmed on Monday that Rubis Energy Kenya had increased prices for refilling LPG cylinders, as other dealers are expected to do so beginning today.

Rubis announced on Friday that prices for refilling 6kg, 13kg and 35kg cylinders would increase effective March 7, with the first two rising by 11.4 percent (Sh160) and 13.2 percent (Sh390), respectively.

“We wish to inform you that the LPG prices have changed for gas refills effective March 7, 2022 as per below price list,” said a March 4 letter from Rubis to its dealers.

The new prices were reflected on Monday at its filling stations.

At Total filling stations, while prices remained at Sh1,410 for 6kg cylinders and Sh2,995 for 13kg cylinders, operators indicated they would rise starting on Tuesday.

“We are expecting that prices will adjust anytime from tomorrow, although I can’t tell by how much,” an operator at a filling station told the Nation.

Other small-scale retail dealers, particularly in the informal settlements of Nairobi, continued to charge prices of about Sh1,400 to refill 6kg cylinders and as low as Sh2,800 for 13kg cylinders.

Refill their cylinders

But the full impact of the new prices will hit households as more dealers raise them and as Kenyans go to refill their cylinders.

An estimated 24 per cent of Kenyan households use LPG for cooking. Its usage more than doubled from 151,000 tonnes in 2016 to 326,000 by 2020 when the government waived Value Added Tax (VAT) on the product to encourage usage of clean cooking fuels. The higher prices will punish almost a quarter of the population.

Data from the Kenya National Bureau of Statistics (KNBS) indicates that prices for refilling a 13kg LPG cylinder averaged Sh2,611 by November 2021, up from Sh2,019 in November 2020. In March 2021, refilling the cylinder cost Sh2,074.

Rubis’ new price for a 13kg cylinder represents a Sh1,266 or 61 per cent increase compared with March last year, a Sh1,321 or 65.4 per cent rise from the prices in November 2020, and Sh729 or 27.9 per cent higher than three months ago.

This means that households’ expenditure on refilling LPG gas – a necessity for a majority of urban families – has increased by about a third in just three months and over half in the past year.

Jambopay.market says the current prices for refilling a 13kg of Supa Gas, a National Oil Corporation LPG brand, is Sh3,000, while a 6kg cylinder is Sh1,400.

The higher LPG prices are partly blamed on the global increase in the prices of butane and propane, the by-products of crude oil used in making the gas, due to the market forces of demand and supply.

But industry regulators have also cited a cartel in the sector for price fixing so as to ensure gas prices remain high.

Minimum prices

Last year, the Competition Authority of Kenya (CAK) fined 32 players in the sector Sh400,000 for colluding to set high prices for refilling LPG gas by fixing minimum prices for the 6kg and 13kg cylinders. CAK found the Energy Dealers Association culpable of hatching the illegal plot that was meant to have LPG cylinders sold to Kenyans at fixed prices, contrary to competition laws.

“The Authority discovered there was a proposal to, among others, set the minimum prices for 6kg and 13kg LPG cylinders. Subsequently, the Association has paid a financial settlement of Sh408,000 which is equivalent to 5 percent of the relevant annual turnover and undertaken not to engage in anti-competitive conduct,” CAK said in a statement.

Even though there was no evidence that the players proceeded to implement the proposals, CAK noted, the intent was contrary to section 21 of the Competition Act, which outlaws restrictive trade practices, including price fixing.

While dealers have blamed the reintroduction of 16 per cent VAT on the product since July 2021 for the increase in prices, consumers have faulted the high adjustments that overweigh the new taxes by far.

The Energy and Petroleum Regulatory Authority (Epra) last year attributed the high increase in the prices of LPG to the lack of a common entry/purchase of gas such as the Open Tender System applied in the petroleum products market.

But Epra said in November 2021 that plans were “in place to introduce a similar model in the near future”.

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