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September 25, 2017

Households hit as gas prices increase

Gas cylinders at a filling station. Photo/File
Gas cylinders at a filling station. Photo/File

Liquified petroleum gas marketers have increased the cost of refilling cooking gas cylinders amid rising cost of importing the commodity from the international markets.

This is the first time in two years the cost of LPG has been adjusted upwards, adding more pressure to household budgets.

Prices have increased by an average of Sh330, according to data by the Kenya National Bureau of Statistics.

KNBS said refilling a 13-kg gas cylinder cost an average of Sh2318 in February from Sh1989.9 a month earlier and Sh1976.4 in December 2016.

Cooking gas prices dropped below Sh2000 last July after the Treasury removed the value added tax on LPG.

A spot check in the market showed the 13-kilogramme cylinder is retailing at Sh2,000 up from Sh1850 a month ago in the retail outlets owned by the major oil marketers like Total, Shell, Hashi and Oilibya.

However, estate cooking gas vendors are yet to increase prices.

Kenya sources LPG mainly from Saudi Arabia and imports an average of 14,000 tonnes per month.

The average price of LPG around the world is $790.80 per metric tonne.

The LPG market has become lucrative for investment in the past two years, driven by rising demand for the fuel.

KNBS data indicates the consumption of LPG increased by 188.93 per cent to 180.83 metric tonnes in 2016 from 62.65MT in 2015.

Estate vendors control over 70 per cent of the LPG market currently.

They have thrived by offering cutthroat prices, as low as Sh1650 for refilling the 13-kg cylinder since 2015.

This has allowed more poor households to adopt LPG an alternative fuel.

The increased uptake has also been boosted by the standardisation of the cooking gas cylinder valve and aggressive marketing of the LPG as a more cleaner energy than firewood and kerosene.

Higher prices could lower the demand for LPG as thousands of households struggle to survive due to a high cost of living triggered by a spike in food, fuel and electricity prices.

KNBS said inflation rose to a multi-year high of 9.04 per cent last month from 6.99 per cent in January.

This is the highest rise since June 2012 and surpassed the government's inflation target of between 2.5 per cent and 7.5 per cent for the first time since December 2015.

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