It's back to firewood, charcoal as cooking gas prices increase

Data from the Kenya National Bureau of Statistics (KNBS) shows that LPG consumption stood at 123,150 tonnes from January to June, a substantial drop from 188,850 tonnes consumed in the first half of last year.

This is the lowest level since 2018.

Also on the decline was the consumption of kerosene, which has in the past been an alternative fuel for cooking and lighting among Kenyans.

Kerosene usage dropped 21 per cent to 47,950 tonnes over the first half of 2022 compared to 60,750 tonnes in 2021.

The cost of kerosene has also been going up and while it is classified as a dirty fuel, it has been an option for households that may have found cooking gas costly.

"We expected the consumption of LPG to have dipped by more than 50 per cent on high pricing that resulted from imposition of harsh taxation and other logistical costs of transporting the same to the end user," said Consumers Federation of Kenya Secretary General Stephen Mutoro.

"The fact that kerosene declined in consumption is for the very reasons of pricing as it is very costly."

The government in July last year introduced 16 per cent VAT on cooking gas. Combined with the high cost of LPG in the global markets, the new tax led to a sharp rise in prices.

Refilling a 13-kilogramme cylinder went up to Sh3,200 in June this year, according to KNBS data, from about Sh2,000 in June 2021, just before imposition of VAT.

Parliament in June approved a National Treasury proposal to cut VAT on LPG by half to eight per cent in an attempt to reduce the cost of living.

This resulted in a slight decline in retail prices to between Sh2,800 and Sh3,000 depending on the retail outlet.

"From a policy perspective, we think that the LPG price setting planned for June 2023 may make the situation even worse," Mr Mutoro said.

"What is needed is for the government to create incentives for investors to put up more LPG plants."

He said President William Ruto should break the glass ceiling by introducing competition on LPG imports because "having a monopoly has pushed prices higher by over 100 per cent".

He added that the high cost of cooking gas could erode the gains that Kenya has made over the past decade in getting Kenyans to adopt LPG.

There has been a mix of policy interventions as the government tried to increase LPG usage and reduce use of fuels that are harmful to both the environment and human health.

Kenya in the past 10 years increased the annual consumption of LPG to 371,400 tonnes in 2022 from a paltry 92,900 tonnes in 2013.

According to the 2019 Kenya Housing and Population Census, more than half of the households living in urban areas - 52.9 per cent - rely on LPG as the primary fuel in their kitchens.

Over the years, the per capita consumption has risen to 7.5kgs in 2020 from 2.5kgs in 2012, according to data from the Energy and Petroleum Regulatory Authority.

Among the factors that saw the increase in use of LPG include lower tax, rising cost of kerosene that was hit by taxes to combat adulteration of diesel and also the high cost of charcoal that shot up after a ban on logging in government forests.

The 2009 LPG regulations also played a key role following the formation of the LPG cylinder exchange pool. The pool enabled consumers to refill their cooking gas from any marketer and even retailers next door irrespective of the brand.

This, however, had the unintended impact of increasing illegal refilling and saw the government scrap the exchange pool in 2019 with the implementation of new regulations.