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Poor households hardest hit as cooking gas prices set to rise

By Dominic Omondi | Published Mon, August 13th 2018 at 00:00, Updated August 12th 2018 at 19:31 GMT +3
Employees arrange cooking gas cylinders at a depot in Nyeri Town. The price of a 13kg cylinder rose by 4.95 per cent last month to Sh2, 176 compared with Sh2, 073 in July last year. [File, Standard]

The Government has introduced duty on the importation of gas cylinders, which could put the cooking gas out of reach of many poor Kenyans.

This comes barely two months after National Treasury Cabinet Secretary Henry Rotich imposed punitive excise taxes on kerosene, another fuel popular with a majority of poor households.

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Kenya, Rwanda and Uganda in the East African Community (EAC) Gazette for June 30 did away with the duty-free importation of Liquid Gas (LPG) cylinders, slapping them with a 25 per cent import duty.

This is likely to see the price of the cleaner and more efficient energy source rise beyond the reach of most households that are already overburdened by a steep cost of living.

Uptake of LPG has been picking up steadily in recent years, as more Kenyans abandon fuel sources such as kerosene, firewood and charcoal. However, the latest policy is likely to put a damper on this momentum.

In July, the price of a 13kg cylinder rose by 4.95 per cent to Sh2, 176.31 compared with Sh2, 073.62 in July last year, according to data from the Kenya National Bureau of Statistics (KNBS).  

The price of kerosene has also been on an upward trajectory, with KNBS data showing that a litre of the fuel increased by 36.41 per cent to Sh86.69 compared with Sh63.55 in the same period last year.

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Harmonise rate

On July 1, the Energy Regulatory Authority (ERC) recalculated the maximum pump prices for kerosene for the period between July 1 and July 14, hiking the price of a litre of the fuel by Sh3.1 as proposed under the Finance Bill 2018.

“As a result, the commission has recalculated the maximum pump prices for Kerosene that will be in force from July 1 to July 14, 2018 taking into account the additional duty,” said ERC in a Press release signed by Director-General Robert Pavel Oimeke.

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The High Court has since suspended the implementation of the tax proposal as well as other new excise taxes, pending a determination on their constitutionality.

The Government’s decision to increase excise taxes on kerosene was aimed at encouraging more Kenyans to use cleaner energy sources such as LPG as well as combating adulteration of the fuel.

“Mr Speaker, in order to reduce the incidence of adulteration of fuels, I propose to harmonise the rate of excise duty applicable on illuminating kerosene to Sh10,305 per 1,000 litres,” said Rotich, effectively removing kerosene a favourable duty rate of Sh7,205 per 1,000 litres.

The Government plans to move low-income households, especially those in rural areas, away from the use of wood fuel and kerosene.

It intends to achieve this by helping them purchase six-kilogram cylinders with burners and meko-type grills. Mekos refers to the smaller 6kg gas cylinders.

However, it looks like the latest decision will only drive low-income Kenyans to wood fuel and charcoal.  

Limited access

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Access of charcoal by poor households in many areas has also been limited after the Kitui County Government banned the trade.

The fuel source’s price in Nairobi and other neighbouring counties skyrocketed, nudging up the price of food as well.

The national statistician in its consumer price indices and the inflation rate for July 2018 the price of a four-kilogramme tin of charcoal shot up by 68.34 per cent to Sh137.39 in July 2018 compared with Sh81.61 in the same month last year.

 


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