Cooking gas costs increase to 25-month high on expensive petroleum

Sunday August 5 2018

The government has scrapped VAT to raise uptake of cooking gas. FILE PHOTO | NMG

The government has scrapped VAT to raise uptake of cooking gas. FILE PHOTO | NMG 

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Cooking gas prices have shot to a 25-month high, returning to levels seen before the government removed value added tax (VAT) on the clean fuel.

Official data shows that the cost of refilling a 13-kg gas cylinder rose to an average of Sh2, 176 last month, up from 2, 170 in June and Sh2, 073 in July last year.

July’s cost is the highest since June 2016, when Treasury scrapped VAT on gas to cut costs and boost uptake among poor households who rely on dirty kerosene and charcoal for cooking.

Prices stood at an average of Sh2,231 in June 2016, and dropped to below Sh2,000 in October, four months after the scrapping of the 16 per cent VAT.

The price has, however, has been on a steady climb since last August in line with rising petroleum cost, according to the Kenya National Bureau of Statistics (KNBS).

The rise happened in an environment of rising inflation which rose to 4.35 per cent last month from 4.28 per cent in June.

The Energy Regulatory Commission (ERC) has delayed plans to control gas prices awaiting an upgrade of the LPG storage and handling facilities for issuance of single gas tender commonly referred to as the open tender system (OTS).

Kenya has since 2010 been controlling diesel, petrol and kerosene costs. Oil prices are reviewed mid-month on a number of market factors, including the price of crude.

The ERC has plans to start publishing cooking gas prices to enable consumers push cash-hungry dealers to lower the cost of the commodity.

Gas has become the preferred energy source for households that can afford it in major towns, due to its convenience and cleanliness when compared to cooking fuel and charcoal whose cost jumped 68 per cent to Sh137.39 for a four kilogramme tin.

Charcoal prices have risen faster in the past few months due to a ban on logging in government efforts to improve forest cover.