The government’s decision to re-impose a 16 percent Value Added Tax (VAT) on liquefied petroleum gas (LPG), often known as cooking gas, has thrown the ambitious goal of 100 per cent clean household energy access by 2028 into jeopardy.
The Russian-Ukraine situation has contributed to the imposition of a VAT on gas has pushed prices in Kenya to new highs.
Rubis Energy Kenya revised its retail prices on Friday, raising the price of refilling a 13 kilogramme cylinder by over Sh250.
The dealer’s charge for the 13-kilogramme cylinder, according to the business, was Sh2,684 before VAT, which raised it to Sh3,113.
Consumers, on the other hand, would be able to refill the cylinder for Sh3,340 starting today.
Kenya’s LPG business is mainly controlled by big players, including Total, Vivo, Rubis, Oil Libya and Africa Gas and Oil (AGOL), which owns Proto gas.
Cooking gas prices are not controlled unlike those of petrol, diesel and kerosene.
According to a study conducted in collaboration with the Kenyan ministries of Health and Energy by the Universities of Liverpool, University College London, and Moi University, 50percent of urban households cooking with LPG gas in Western Kenya have decreased due to high taxes, while 75percent of Kenyans continue to rely on dirty cooking energy.
“The VAT re-introduction highlights a decline in clean cooking with LPG for 50 per cent of the studied urban households, with LPG being substituted by health-damaging fuels such as charcoal and wood.
Three-quarters (75 per cent) of Kenyans still cook with polluting fuels,” the report notes.
Despite health concerns, the use of cheaper filthy fuels is projected to rise further as LPG prices climb by up to 30 per cent this week due to disruptions in the supply chain of petroleum products and rising freight expenses.
The Kenya National Bureau of Statistics (KNBS) reports that charcoal and kerosene prices have risen, indicating greater demand as LPG becomes more expensive for households.
A less expensive alternative in December 2021, the price of a kilo of charcoal climbed by around 5 per cent to Sh61.31 per kilo, while the price of a litre of kerosene jumped by 7percent to Sh106.
The two, together with firewood, are the most cost-effective alternatives to expensive LPG.
The national average LPG usage has declined as well, from 36,000 tonnes in January to around 28, 000 tonnes in December 2021, with the price of a 13kg gas refill increasing by almost 30percent to Sh2,638.83 in December 2021.
With leading oil marketers announcing an extra Sh600 (30per cent) price rise for 13kg cylinder refills on March 7, the entire price has now jumped by a whopping 60 per cent when compared to the first quarter of 2021.
