Start-up’s model to offer low-cost cooking gas for use in city slums - Daily Nation
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Start-up’s model to offer low-cost cooking gas for use in city slums

Sunday October 21 2018

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Refiling a 50kg cylinder costs Sh8,800, 22.5kg Sh7,200, 13Kg Sh2,290, 6kg Sh1,060, and 3kg Sh530. FILE PHOTO | NMG  

By EDWIN OKOTH
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After a few turns on narrow paths down Mukuru kwa Njenga slums in Nairobi, we find Felister Mbithe outside her twin-room tin house.

Felister is among the 700,000 Nairobi residents being targeted for an alternative liquefied petroleum gas (LPG) supply model, which allows consumers to pay for gas in small tokens the same way an electricity pre-paid meter works.

The model is an innovation by a local start-up, which has designed smart meters attached to gas cylinders to allow low-income consumers to purchase gas in tokens and gradually ditch charcoal and kerosene.

PayGo Energy’s revolutionary model — which is being piloted among 300 slum residents — is set to be a game-changer in migrating poor households from dirty fuels by breaking two main barriers: the initial costs of gas equipment and making full cylinder refills.

With charcoal fast becoming a rare commodity following the recent logging ban and the government’s effort to save trees — and kerosene now costing as much as diesel — the PayGo entrepreneurs’ innovation has found favour with its target mass market as it aims to net 5,000 clients in the next year.

The model, which involves supplying a new user with a cylinder, a regulator and pipe, a two-burner stove and a fire blanket as well as some safety training as they pay gradually to own them over time, will be replicated in other cities in Africa.

Apart from having the upfront cost headache taken care of, the user is cushioned from running out of gas as they get alerted whenever their cylinders run low.

Mr Nick Quintong, the CEO and co-founder of PayGo, told the Sunday Nation that the idea was informed by the same piped gas concept in developed countries where gas is paid for like other utilities but since there was no such infrastructure here, the slum mass market was the best target to rid them the risks of using dirty fuel and earn in the process.

“For people with unpredictable income, we realised their barriers were basically the cost of acquiring the cylinder and even after buying the cylinder, the cost of refilling the entire cylinder was even a bigger barrier because once it runs out you need some Sh1,000 to refill it. This basically confined them to using charcoal and kerosene which in the long run are both dirty and expensive,” Mr Quintong said.

The start-up first carried out a feasibility study in 2014, arriving into an estimate that close to 700,000 households in Nairobi were stuck to using kerosene and charcoal since they could either not afford the initial cost of acquiring a cylinder and the gas cooking set up or they had cylinders they could not refill when they run out of gas.

The study found that 20 percent of the slum dwellers already had cylinders but were constantly pushed back to using the slow, dirty and expensive fuels like Kerosene and charcoal since they could easily purchase them in smaller quantities unlike a 6kg cylinder which requires one to have at least Sh1,000 to refill even after making the expensive initial cost of acquiring it.

While several innovations in the upstream petroleum sector has been a key driver in the oil industry, very little has been done in downstream segment especially in the developing countries according to the World Bank, which estimates that 4.5 million die from household pollution globally.

It is easy to tell, for example, how much LPG is imported into the country but it remains hard to estimate how much each household consumes or need given the difficulty in tracking data beyond the major depots.

The use of such smart meters may now fill the critical data gap the country needs to inform its progress towards the aspirational per capita consumption of clean energy in heating.

The model, in partnership with LPG outlets, uses small trucks to deliver cylinders to small stations around the slum from where a leather back pack in which the 6kg cylinder fits is used to deliver the commodity to the customers’ doorsteps.

“The fire blanket has proven to be a critical component of our package. The majority of our customers live in informal settlements where there are frequent fires. We have already had a couple instances where our fire blankets have been used effectively.

“Safety is our number one concern. We train on our customers on how to address a fire threat and we have included a quick release between the system and the stove so that customers can remove the cylinder from the household if needed,” said Mr Zach Kolp, PayGo head of finance.

Kenya is still struggling to create better models for LPG to address its over six million households relying on dirty fuel to cook.

Petroleum Permanent Secretary Andrew Kamau said Kenya could incorporate piped gas supply to the new houses being constructed under one of the Big Four Agendas of affordable housing.