State seeks private funding to rekindle cheap gas project

The 6kg gas cylinders will be distributed to households by liquified petroleum gas marketers under the State’s subsidised cooking gas programme. [Elvis Ogina, Standard] 

The government is seeking to tap into private sector players’ funds to resuscitate its plans to distribute millions of gas cylinders to households following the collapse of a similar project. 

The Energy and Petroleum Ministry on Tuesday, invited firms in the cooking gas industry to send expressions of interest in funding and distributing six-kilogramme gas cylinders to households in rural and peri-urban areas across the country. 

In a notice, the ministry said the government would cater for 40 per cent of the costs, while the selected Liquefied Petroleum Gas (LPG) dealers would cater for another 40 per cent.

The balance of 20 per cent will be borne by consumers, which the ministry noted would be treated as a “cylinder deposit.”

The government has also separately invited local LPG gas cylinder producers to express interest in the manufacture of the gas cylinders, which will then be distributed to households by oil marketers under the State’s subsidised LPG programme. It is yet another attempt by the government to increase the use of cooking gas among Kenyans, with previous attempts failing on account of several factors.

They include allocation of insufficient funds, quality concerns of cylinders, as well as inadequate capacity within the National Oil Company (Nock), which was charged with implementation of the programme.

In increasing reliance on private sector players, the government targets to grow the per capita consumption of LPG to 15kg from the current 7.5kg.

In the notice yesterday, the ministry invited expressions of interest “from reputable firms (or consortia of firms) to submit proposals for funding, procurement and distribution of subsidised LPG”. 

“The government of Kenya intends to distribute the cylinders to all 47 counties with a preference to increasing LPG penetration in the rural and peri-urban areas through these firms,” said the ministry.

“The government intends to undertake this initiative through a financing model comprising the government of Kenya funding, private sector funding (that is, LPG marketing company) and consumer funding.”

It explained that consumers would pay 20 per cent of the total cost of the cylinder filled with gas as well as burners and grills, while the balance of 80 per cent would be split between the government (40 per cent) and the LPG firms (40 per cent). The selected LPG firm will also handle subsequent refills.

“The LPG company will be the designated brand owners and shall be responsible for refilling and maintenance of the cylinder as per the Petroleum (LPG) regulations of 2025,” said the Ministry, adding that the LPG marketer would also supply the seed gas and accessories, that is, the burners and grills.