Cooking gas prices drop as state cuts Value Added Tax by 50%

The VAT review was done two weeks ago but it was only on Monday that the new retail prices were announced.

The price cut follows the enactment of the Finance Act, 2022, which reviewed  VAT on Liquid Petroleum Gas (LPG).

A spot check by the Star established that dealers have cut the price of refilling a six-kilogram cylinder of LPG by between Sh100-150 and the 13kg cylinder by Sh200-250.

A new price list guide at a Shell outlet in Westlands that sticks Afrigas indicates that refilling a 6kg cylinder is now Sh1,440 from Sh1,560 and 13kg at Sh3,100 from Sh3,350.

National Oil Corporation of Kenya outlets in Nairobi is refilling a 6kg cylinder of Supa Gas at Sh1,400 from Sh1,500 and the 13kg cylinder at Sh3,050 from Sh3250.

David Muo, a dealer in Juja, is currently refilling the 6kg cylinder for Sh1,300 from Sh1,450 and the 13kg for Sh2,800 fromSh3,050.

Muo told the Star that initially the wholesale prices of all cylinders except multinational and Pro Gas was Sh190 per kg.

Pro Gas was Sh202 per kg and multinational (K-gas, Total, OiLibya, Afri, etc) was 200 per kg.

“Currently we are getting Pro Gas at Sh188 per kg, multinational at Sh185 per kg and the other cylinders at Sh178 per kg,” said Muo.

This translates to a wholesale price of Sh1,128 for 6kg cylinder from Sh1,212 and Sh2,444 for 13kg from Sh2,626 for the Pro Gas which is the most expensive of all the cylinders.

Energy and Petroleum Regulatory Authority does not regulate cooking gas prices.

This means its pricing is determined by the market forces of demand and supply, a fact that gives dealers leeway to price their products according to market dynamics.

Yesterday, global crude oil prices dropped by 12 basis points to below $95 a barrel for the first time since Russia invaded Ukraine.

Brent, the international benchmark, fell as low as $94.50 a barrel. It closed at $96.84 on February 23, the day before Russia invaded Ukraine.

This is expected to drop further as the Organisation of Petroleum Export Countries (OPEC) meets this Thursday. 

The main motive of the meeting shall be to discuss strategies and plans to increase oil extraction in many countries. 

With crude oil prices falling over the past two days, there is a fair chance that oil marketing companies will consider lowering LPG prices.

Cooking gas is currently imported by private players which gives them the ability to set its prices, but a common user facility will enable LPG to be imported through the open tender system (OTS) where firms will compete to import the cheapest LPG.

Ola Energy is set to expand its LPG import handling and storage capacity to 15,450 tonnes from 450 metric tonnes by next year as it seeks a bigger share of the cooking gas market.

Kenya Pipeline Company (KPC) is also set to build an LPG storage facility at the Kenya Petroleum Refineries Ltd (KPRL) in a move to streamline the importation of cooking gas into the country.

Oil marketers are now eyeing a pie of growing demand for the commodity across Kenya and the larger East African region.

Data from the Kenya National Bureau of Statistics show that there has been a rise in demand for LPG in Kenya with consumption hitting 182,540 tonnes in December 2021, up from 167,200 tonnes a year earlier.