Illegal cooking-gas-filling businesses are likely to increase due to a surge in demand following the government's decision to scrap Value Added Tax on Liquified Petroleum Gas.
This is according to the Petroleum Institute of East Africa, which now wants the government to aggressively crack down on the illegal businesses.
PIEA data show gas consumption grew by 83 per cent between July and September to 81,356 tonnes compared to 44,360 tonnes in the same period last year. This is attributed to low taxes on the commodity.
Chairman Powell Maimba yesterday said the uptake of LPG is likely to grow further after President Uhuru Kenyatta signed into law the Finance Bill 2016 last week, effectively zero-rating the commodity.
Increased use of gas in households is likely to attract unscrupulous traders seeking to make a kill from the multibillion-shillings sector, the institute warned.
“We need to get rid of illegal refilling of gas and let LPG go through the right process from the beginning to the end,” Maimba spoke in Nairobi during the IPEA quarter-three Petroleum Insight Magazine launch.
He said the market became awash with unscrupulous dealers when the standardisation of gas cylinder valves (regulators) came in place.
“The measure opened up illegal business. Some of them don’t use the right gas or process. Some add water,” Maimba said.
Last year it was estimated that about seven out of 10 gas cylinders in the market were illegally filled by unlicensed dealers. The gas is mainly sneaked into the country from Tanzania.
Meanwhile, the country’s demand for petroleum increased by 30 per cent from January to June 2016, the PIEA data released yesterday shows.
Kerosene consumption grew 52 per cent to 269,062 tonnes from 176,879 tonnes. Uptake of aviation fuel (JetA-1) also went up 33 per cent to 413,555 tonnes from 310,020.
“The high number of huge conferences in Nairobi drove consumption of aviation fuel as huge numbers of delegates jetted into the country for the conferences,” Maimba said.
Demand for industrial diesel, however, dropped by 11 per cent with the local market consuming 418 tonnes down from 467 tonnes last year.
Oil marketer – Total – controlled the highest petroleum market share accounting for 18 per cent of the total sales. Vivo was second with 17.8 per cent, while KenolKobil closed the top three sellers with a 15.5 per cent share.
Retail outlets mainly petrol stations accounted for 45.57 per cent of the products sold during the period. Resellers took 26.6 per cent, while the civil aviation industry took up 13.29 per cent. The manufacturing sector consumed a paltry five per cent.