The price of cooking gas has increased by 48% over the last one year, hitting a high of Ksh. 2,978 for the 13kg cylinder. Currently, a 13kg cylinder of gas from Total is retailing at Ksh. 2,995, Rubis K-gas at Ksh. 2,950 and Shell/Vivo’s Afrigas Ksh. 2,990.
Although the industry players attribute the surge to the 16% VAT imposed and global prices, the price increases have far outpaced the tax increment. Small gas dealers have accused some big players in the sector of colluding to fix prices, using tax as a cover. The price of cooking gas has gone up by almost Ksh 1,000 since January 2021, more than three times the 16% value-added tax (VAT) introduced by the government on the commodity.
“Prices are going up daily because of the tax, which we are still fighting in court, as well as the monopoly of the importer and Petroleum Institute of East Africa (PIEA), which is acting like a cartel,” said Kepher Odongo, the Energy Dealers Association secretary-general.
Unlike fuel, the prices of cooking gas are not controlled by the government. This limits the number of investors coming into the sector, resulting to vulnerability of price changes by the players in the market as they determine prices according to their market share.
In 2016, the government had imposed a levy on the 16% VAT on the commodity in a move to boost uptake among the poor who rely on dirty kerosene and charcoal for cooking. However, the Finance Act 2020 amended the VAT Act, removing the supply of LPG including propane from the list of zero-rated items. Last year, the government re-introduced the 16% VAT on the commodity, resulting to a Ksh. 300 rise in the price of cooking gas.
The rise in the price of cooking gas is expected to take a hit on poor families who are juggling between increased prices of fast moving consumer goods and fuel increase. This adds a strain on consumers purchasing high electricity bills, food and importation prices.