Cheap cooking gas promise by president Ruto delayed until 2028

Liquified Petroleum Gas (LPG) storage facility by Asharami Synergy Limited delayed.[File, Standard]

Kenyans expecting to start using cheap cooking gas have a huge setback as the construction of a Sh4.6 billion Liquified Petroleum Gas (LPG) storage facility by Asharami Synergy Limited has been delayed until 2028.

The construction of the facility was aimed at lowering cooking gas costs through bulk importing, with the current development occasioned by the retraction of a March 2023 pledge by President William Ruto to subsidise 6kg cylinder refills to Sh300-500.

While a 2023 tax reduction caused a minor price dip, the dream of affordable cooking gas remains a pipe dream for many Kenyans, leaving households relying on expensive, inefficient alternatives with citizens now left with high prices in an unregulated retail market.

Appearing before the Senate Energy Committee chaired by Siaya Senator Oburu Odinga, Petroleum Principal Secretary Harsama Kellow disclosed that the Sh4.6billion LPG bulk storage facility being constructed by Asharami Synergy Limited will be complete at the end of 2028.

“Once complete, the facility shall provide additional storage capacity of 30,000 metric tonnes, which enables the implementation of the bulk import arrangement. Due to the economies of scale resulting from consolidating imports, the landed costs of LPG is expected to reduce, thereby promoting uptake,” said Kellow.

He said the government intends to increase the uptake from 15 per cent to 70 percent within four years and the establishment of a common user facility and that the project, as promulgated under the LPG National Growth Strategy, will help to develop and maintain an integrated, safe and efficient LPG bulk handling infrastructure and supply chain.

Kellow told Senators that the project shall improve security of supply of LPG and affordability through the anticipated lower cost of gas due to economies of scale, and the members of the public shall benefit from the economies of scale.

In March 2023, President Ruto announced that a 6kg cooking gas cylinder would cost between Sh300 and Sh500 by June 2023 during the launch of the Women Enterprise Fund at the KICC in Nairobi. He outlined several measures to achieve this price reduction.

Ruto announced that the government would subsidise the cost of the 6kg gas cylinder by Sh2,000 and further promised the removal of the eight percent Value Added Tax (VAT), Railway Development Levy (RDL), and Import Declaration Fee (IDF) on Liquefied Petroleum Gas (LPG) products in the Finance Bill 2023.

“The reductions were part of a clean energy agenda aimed at eliminating the domestic use of wood fuel, charcoal, and paraffin, explaining that the initial target could not materialise by June due to the need to eliminate rogue operators in the cooking gas market; prices of gas will go down after we scrap the taxes imposed on them,” said Ruto.

However, in May 2023, Ruto backtracked on the timeline and clarified that the Sh300 to Sh500 price range applied only to purchasing the physical gas cylinders, not the gas refills themselves, which left Kenyans questioning whether he was keen to deliver on the earlier promise to citizens.

While the Finance Bill 2023 successfully eliminated the eight per cent VAT on LPG to lower overall prices, the core promise of a Sh300–Sh500 refill went unfulfilled, drawing widespread criticism from the public.

According to the Kenya National Bureau of Statistics (KNBS), Kenyans were refilling a 13kg cylinder at Sh3,106 in September 2022 and Sh2,795 in September 2023, which indicates a drop of about 10 percent.

The major driver of cooking gas prices in Kenya is the lack of regulation on retail prices for LPG. With the lack of regulation of cooking gas prices, the cost of LPG remains out of reach for most households in Kenya.

On October 9, 2023, the cabinet met and discussed ways to reduce cooking gas prices to make it affordable to the common Mwananchi while noting that one of the biggest drivers for demand for LPG gas is that it has emerged as a clean and efficient energy source for various industries.

“The proposed measures will further include establishing common-user LPG import terminals, distributing subsidized LPG cylinders to low-income households and promoting LPG use in institutions,” said Ruto.