BY NJIRAINI MUCHIRA AND MACHARIA KAMAU
The acrimonious relationship between oil marketing companies and industry regulator Energy Regulatory Commission ( ERC) is set to deepen after it emerged that ERC is set to introduce price controls for liquefied petroleum gas ( LPG).
More than one year after the ERC reigned in on oil marketing companies following the introduction of fuel price controls, something that has curtailed marketers from adjusting prices at will and in the process eaten into their profit margins, now the regulator wants to replicate the same for LPG.
Move to regulate LPG pricing is already causing disquiet in the industry. [PHOTO: BONIFACE THUKU/STANDARD]
The Weekend Business has established that ERC is reviewing the Energy (liquefied petroleum gas) Regulations 2009, to not only set prices for cooking gas refilling by oil marketing companies, but also to determine how much the various types of gas cylinders should cost.
" ERC plans to start regulating LPG prices after the handling and storage facility under construction in Mombasa is complete," said a source privy to the process.
He further reckons that the aim is to bring down the skyrocketing cooking gas prices that have surged by more than 100 per cent in recent months, as well as promote usage of the gas that is economical compared to kerosene and firewood.
While the introduction of price controls for LPG would be sweet news for consumers with early predictions indicating that prices could decline by as much as 50 per cent, it will be an added pain for oil marketing companies already suffering from the effects of fuel price controls.
This is because it will add on the punitive measures imposed by the 2009 regulations that aimed at enhancing public safety, increasing consumer access, encouraging competition and curbing unfair business practices.
In deed low uptake of environmental friendly LPG has been a major concern for energy sector policy makers who are under pressure to reduce the countryâs heavy reliance on firewood and its negative impact on the environment. Besides, the continuous rise in kerosene prices is becoming a significant burden to low income earners.
Latest pricing
On Friday, the cost of refilling a 6kg gas cylinder stood at Sh2,900 in most outlets, up from Sh1,200 a year ago, while the cost of refilling the 13kg cylinder was Sh4,500 from Sh2,400 a year ago.
