Average cooking gas prices fell below Sh3,000 for the first time in January after a year, continuing a downward trend albeit slow and promising reprieve for households in coming months.
Latest data show the 13-kilogramme cylinder was priced at Sh2,954.36 on average countrywide, a 13-month low.
The commodity remained above Sh3,000 for 11 months straight in 2014, at some point touching a 32-month high of Sh3,111.74 in September. Last month’s was Sh64 lower than December’s average of Sh3,018.45.
A spot check by the Star this week showed smaller retailers are selling the commodity far cheaper than the more formal retailers such as supermarkets and petrol stations.
Vendors in residential areas are selling the 13-kg cylinder for as low as Sh2,200 and Sh1,000 for the six-kilo canister.
However, oil marketers and retail chains are yet to significantly slash their prices.
At Uchumi and Naivas supermarket outlets in Westlands, Nairobi, the 13-kg cylinder is priced at Sh2,990. Oilibya and Shell petrol stations on Waiyaki Way price the same quantity at Sh2,800 and Sh2,700 respectively.
Shell is refilling the six-kilo canister for Sh1,400, while Oilibya prices the same at Sh1,290.
According to the Petroleum Institute of East Africa, in defence of oil marketers, said estate vendors manage to sell LPG [Liquefied Petroleum Gas] at much lower prices due to tax evasion.
“In most instances, estate vendors of LPG evade Value Added Tax [pegged at 16 per cent] and serve as outlets for LPG that has been anded in Kenya without duties and taxes,” PIEA chairman Polycarp Igathe told the Star via emailed response.
PIEA accuses estate vendors of “cylinder poaching”, saying this enables them to mint millions without incurring huge running costs.
The LPG market has become lucrative for investment, driven by rising demand as more people adopt cleaner energy for home use away from firewood and kerosene.
As a result, suspicion has arisen that LPG importers may be colluding to keep prices high because the market segment is unregulated by the Energy Regulatory Commission.
It is alleged that about 70 per cent of the LPG business in the country is being handled by the cartels.
Igathe said the playing field is uneven, adding that major LPG dealers always pay tax.
“Major dealers are losing out. The consumer should be cautious too because the quality of estate LPG is not guaranteed either,” he said.
Nonetheless, it is expected that average cooking gas prices will come down further as oversupply and weakening demand in major markets in Asia push global indices of Liquefied Natural Gas down.
Prices of LNG, the primary commodity for cooking gas, are projected to have dropped by more than 50 per cent by June compared to a similar period last year.
Reuters yesterday said the spot price of LNG-AS dropped to $7.20 per million British thermal units (mmBtu) last week, the lowest since July 2010 and down almost 65 per cent from the same time last year.
