Universal valves stir competition in LPG gas market

By Ramadhan Rajab

The standardisation of gas cylinder valves has spurred competition in the Liquefied Petroleum Gas (LPG) market. In fact, consumers are already reaping the benefits as monopolistic practices slowly wither.

For more than five years, independent gas fillers battled with giant multinationals over the standardisation of gas cylinder valves, a move they predicted would stir competition in the protected and lucrative energy sector.

Players in the industry now say the move has opened the market and increased consumer access to LPG gas. Many more Kenyans have access to LPG, gas thanks to that single move of standardising the valves.

With the standardisation, one can refill their cylinders from any company without having to undergo extra costs of buying a new valve or regulator. This is a major milestone in LPG gas industry.

Independent gas fillers who mooted the idea now see this move as a milestone in the LPG industry that will eventually lead to protection of environment as more and more people adopt the use of gas as opposed to wood fuel, especially in rural areas.

Planned exit

The competition ignited by standardisation is so stiff that some multinationals are said to be considering relocating from the country due to pressure from independent fillers.

Industry sources intimated that there are plans to develop more gas storage facilities in Kisumu, Eldoret, Nyeri and other towns to ensure ready availability and access across the country. Currently, storage for gas is only found in Mombasa and Nairobi.

Mr Jackson Kariuki, Hunkar Gas chief executive led the war that eventually opened an industry run more like an exclusive business club.

The results have given a lifeline to independent fillers, who are now threatening to drive multinationals out of town.

The promise to small fillers is so high that Hunkar Gas is now planning to expand to Uganda and Rwanda.

Before the standardisation of valves, Kariuki says independent fillers found it near impossible to sell gas.

"It used to be very difficult to sell even one gas cylinder because of the extra cost of buying another valve. Customers were unwilling to incur extra costs,’’ he said.

Kariuki, who lead the five-year push for the standardisation, says the previous practice of every company having its own valve was a monopolistic throwback meant to benefit few multinationals at the expense of consumers.

Monopolistic tendencies

He says the problem with such a practice meant that one could only access LPG gas from a specific company.

"The problem with this is that if such a company did not have a good distribution network, it meant limited access to the commodity," says Kariuki.

"This also meant that if the firm did not have the commodity, consumers would not get the same from another company."

Kariuki says at the moment, a consumer will get LPG gas from any depot without any hassles, which he says is an important step in the marketing of the product.

He says by its very nature, LPG remains the same no matter the seller. "Gas is gas. It is the same product from any company. The only competitive edge we have is our affordable prices and wide distribution network."

Kariuki says his company will launch an education campaign to educate people on the advantages of LPG gas in terms environmental protection and affordability.

"Many Kenyans do not know that kerosene is actually more expensive than LPG gas," he says, adding that the more costly part is acquiring the gas cylinder.

He says inadequate knowledge of LPG gas is also a huge hindrance in market penetration.