The price of cooking gas has jumped 48% over the last year hitting an eight-year high of Ksh 2,978 for the 13-kg cylinder. The exclusive club of suppliers attributed the rise to a tight grip on the market as it takes advantage of new taxes to push up costs.
The price of cooking gas has gone up by almost Ksh 1,000 since January last year ,more than triple the 16 percent 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,” Kepher Odongo Energy Dealers Association secretary-general.
Although the industry players are attributing the surge to the 16 percent VAT 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.
Currently, a 13-kg cylinder of gas from Total is retailing at Ksh2,995, Rubis K-gas at Ksh2,950 and Shell/Vivo’s Afrigas Ksh 2,990.
The prices of cooking gas are not controlled by the government like fuel as it will limit the number of investors coming into the sector. However, as a result, the country is vulnerable to the price changes of 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 cost of cooking gas is expected to pile pressure on families that are struggling to afford daily needs due to job losses and drastic cuts in earnings in the wake of the coronavirus pandemic.
The impact of these price rallies is expected to be felt in Kenya this year, adding strain on consumers fighting high electricity, food and importation prices.
Read also; Kenyan Households to pay more for Cooking Gas come July 2021.
