The energy regulator has received 13 new applications from existing and new entrants wishing to build berths for handling cooking gas imports in Kenya, as the country moves to open up the sector ahead of the price control regime in 2025.
The Energy and Petroleum Regulatory Authority (Epra) hopes applications that include, Kenya Pipeline Company (KPC), Eleven Energy and Fossil Fuels will bring competition in the sector and reduce the grip of the Africa Gas and Oil Ltd (AGOL), leading to price cuts in handling of cooking gas imports and ultimately lower prices to the consumers.
But it is the application by KPC that the regulator hopes will push down the cost of cooking gas, and prepare the country for regulation of the sector in two years.
The 30,000 tonne KPC berth to be built at the Kenya Petroleum Refineries (KPRL) in Mombasa and another one with a capacity of 10,000 in Athi River will provide a common-user facility for importing cooking gas like it happens in shipments of super, diesel and kerosene.
The KPC facilities will allow the introduction of the Open Tender System (OTS) for cooking gas imports where the marketer who quotes the lowest prices will win the tender to import the commodity on behalf of the sector with the State setting maximum prices.
“KPC is going to do 30,000 tonnes at KPRL and then 10, 000 in Nairobi. Their application is part of the 13 that are at various stages of evaluation,” Mr Kiptoo told Business Daily.
“The government is going to build a facility at KPRL and it will definitely be cheaper for dealers to use it. Then we bring the imports under the OTS.”
Currently, AGOL with a 25,000 tonnes facility in Mombasa handles nearly 90 percent of Kenya’s cooking gas imports, making it a monopoly in the sector where the government does not cap prices.
In February, Tanzanian business magnate Rostam Aziz, the owner of Taifa Gas broke ground for the construction of a 30,000-tonne cooking gas handling facility in the Dongo Kundu Special Economic Zone, in what will step up competition on AGOL.
The Taifa Gas plant is set to be complete by the end of this year and has been hailed as the first step where the government will use the private sector to help ease prices of cooking gas through stirring competition at the import-handling point.
The 13-kilogramme gas is retailing at upwards of Sh3,300 and the six-kilogramme at least Sh2,000 in Nairobi. Prices are set to rise further in the wake of high global costs of the commodity and the weakening shilling that has made imports costlier.
Efforts to scale up the use of cooking gas took a hit following the re-introduction of a 16 percent Value Added Tax on cooking in July 2021, pushing prices to record highs. The tax was halved last year amid a public uproar over the soaring cost of basic goods and services.
Mr Kiptoo added that the KPC facilities are of urgency to the government given the push to ensure that all public learning facilities use Liquefied Petroleum Gas to cook, helping cut the use of charcoal and firewood and lower environmental pollution.
The government has an ambitious target of ensuring that all public facilities shift to LPG for cooking by 2025.