Business

Government to control cooking gas prices

The state targets to introduce new regulations on the pricing of cooking gas by June next year, adding to the list of petroleum-based products whose prices are set by the Energy and Petroleum Regulatory Authority (Epra).

Unlike petrol, diesel, and kerosene prices, which are adjusted on the 15th of every month and stay in place for one month, cooking gas prices are presently not controlled.

The regulator said that it expects to put in place a framework to guide the pricing of liquefied petroleum gas (LPG) by June next year.

“The pricing framework is intended to enhance the robustness and efficiency of the sector’s regulatory framework as envisioned in Epra’s current strategic plan,” Epra Director-General Daniel Kiptoo said

Epra is already scouting for a consultant to help define the LPG pricing framework. It costs about Sh3,100 to refill a 13kilogramme cylinder of LPG currently.

Kenya’s cooking gas market is tightly controlled by a few private firms that control the importation of the commodity through the ports of Mombasa and Dar es Salaam and its distribution locally.

This has thwarted efforts by the government to lower the cost of the product in a bid to lower the cost of energy and reduce reliance on dirty fuels such as kerosene, charcoal, and firewood for cooking.

About 60 percent of the cost of cooking gas comprises the landing cost of the commodity while about 32 percent of the total price goes to LPG dealers, distributors, and retailers contributing to its high cost.

The government now wants to introduce an open tender system (OTS) for the importation of cooking gas where the lowest bidder will be allowed to ship in the commodity for a specific import cycle.

“The lack of an LPG open-tender system is a major cost determinant as evidenced by the landing costs, which average approximately 60 percent of total retail prices,” said Epra.

Kenya has been preparing for government regulation of cooking gas prices by building a new State-owned terminal that will hasten the offloading of LPG from ships for distribution by trucks.

President Uhuru Kenyatta last month commissioned the new Sh40 billion Kipevu II Oil Terminal that can load and offload all categories of petroleum products.

The Kenya Pipeline Company (KPC) is also seeking to construct a 25,000-tonne storage facility for LPG to enhance the evacuation of the product to trucks for distribution.

KPC says the storage facility will lower demurrage costs incurred by ships waiting in long queues to discharge LPG which will reduce the cost of cooking gas by 30 per cent.

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