A variety of cooking gas cylinders/ themailnewsonline.com
NAIROBI, Kenya Mar 25- The National Treasury is currently looking into plans to reinstate the subsidy scheme aimed at providing Kenyans with cheap cooking gas from July as LPG (Liquefied Petroleum Gas) prices in the country continue to soar.
Spiking crude oil prices in the wake of the Russian invasion of Ukraine, increased value-added tax (VAT) on cooking gas as well as dealers imposing higher margins on the commodity have seen LPG prices rise to their highest level in Kenya’s history.
For instance, the 13-kilogramme cooking gas currently goes for Sh3,400, jumping more than 50 percent from Sh2,250 in June last year. On the other hand, the six-kilogramme cooking gas is currently retailing at Sh1,600, a 77 percent rise from Sh900 last June.
Cooking gas prices reported a significant increase last June after the government imposed the 16 percent tax at the start of the current financial year, pushing the commodity out of reach for most households.
The draft Budget Policy Statement for the year starting July now reveals that the Treasury has listed the cooking gas distribution scheme as a priority public investment under infrastructure development
Treasury Cabinet Secretary Ukur Yatani said that in the next financial year starting July the ministry expects to fund the supply of at least 300,000 gas cylinders to ensure more poor households have access to clean cooking gas.
This is, however, only a small percentage of the target of three million that was outlined in the initial plan.
The cooking gas subsidy scheme introduced by the Ministry of Energy during the 2016/17 financial year was aimed at cutting reliance on fossil fuels including kerosene and charcoal, widely used in rural and urban poor households.
Its implementation was hampered by some suppliers providing faulty cylinders and distribution challenges at the State-owned National Oil Corporation (Nock), which was to spearhead the programme.
Under the initial subsidy programme, beneficiaries were to pay a discounted price of Sh2,000 spread across a three-year period for the burner and cylinder, with refills valued at Sh840 at the time.
Nock piloted the project from October 2016 in Machakos and Kajiado counties but it later ran into difficulties after the State audit office found that some Sh870 million had been spent with no value to taxpayers.
It also emerged that fraudulent contractors supplied 67,251 faulty gas cylinders, out of more than 200,000 that were delivered.
The audit showed that 10 firms had been contracted by the Ministry of Energy in May 2017 to supply various components of the LPG gas project at an aggregate cost of Sh1 billion.
The return of the subsidy comes amid the sharp rise in the cost of cooking gas that has piled pressure on families already struggling with daily bills due to job losses and drastic cuts in earnings in the wake of the Covid-19 pandemic.
LPG has become the preferred energy source for households that can afford it in major towns due to its convenience and because it is cleaner than other cooking fuels.
2019 data by the Kenya National Bureau of Statistics reveals that 53 percent of households in urban centres rely on LPG for cooking compared to 5.6 percent of those in rural areas.
Fuel prices, including that of LPG, have hit a record high in many countries, tightening the squeeze on consumers.
The pump prices are driven largely by the wholesale price of energy, which has shot up amid fears of global economic shocks from Russia’s invasion of Ukraine.
Oil prices soared after Russia invaded Ukraine, with the price of Brent crude oil – the global benchmark for prices – hitting a near 14-year high of $139 per barrel at one point.
Brent crude was down at $99.95 per barrel early Wednesday.
While the cost of super petrol, diesel and kerosene are adjusted on the 14th of every month and stay in place for one month, cooking gas prices in the country are not controlled.