Why Energy Regulator Plan to Control Cooking Gas Prices

The Energy and Petroleum Regulatory Authority (EPRA) considers implementing cooking gas prices control following Cabinet approval by establishing a framework for the importation of cooking gas through the Open Tender System and introducing retail price regulations.

This move comes after the Cabinet’s approval in December, aimed at reducing the cost of Liquefied Petroleum Gas (LPG) by breaking the monopoly in the sector. By lowering prices, the government hopes to encourage more households to adopt clean energy, with a goal to increase annual gas consumption per person from 7kg to 15kgs.

According to EPRA, a study has been conducted on streamlining and standardizing prices in the LPG sector, while improving safety and standards. The government aims to increase LPG penetration from the current 24 per cent to 70 per cent by 2028.

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The study, conducted by energy consulting firms Kurrent Technologies Ltd and Channoil Consulting Ltd, examined factors influencing the pricing value chain. The report proposed a price determination model aligned with market conditions, potentially set for implementation before the third quarter of this year.

“We are in a transitional phase and are currently developing implementation mechanisms. Consultations have been ongoing, and we continue to engage,” EPRA Director General Daniel Kiptoo asserted.

At present, cooking gas prices are not regulated, allowing industry monopolies to dictate pricing, leaving consumers vulnerable to markups imposed by importers and retailers.

Speaking at the launch of the LPG program for schools at Jamhuri High School in Nairobi last December, President William Ruto announced that the government had established comprehensive policies, regulations, and standards to promote the sector’s growth while prioritizing health and safety.

“A vibrant LPG sector holds immense economic potential, including boosting investment and creating jobs,” president Ruto stated.

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The introduction of an Open Tender System (OTS) is expected to attract more participation from Oil Marketing Companies in the country, breaking the current monopoly held by Africa Gas and Oil Ltd, which manages up to 90 per cent of imported volumes using a 10,000-tonne storage facility in Mombasa. According to EPRA data, LPG demand grew by 8 per cent in 2023, reaching 360,594 metric tonnes.