Cooking gas prices have risen 48 percent in the last year, reaching an eight-year high of Ksh 3,350 for a 13-kg cylinder. The spike was attributed by the restricted club of suppliers to a tight hold on the market as it takes advantage of additional tariffs to drive up expenses. Since January last year, the price of cooking gas has increased by over Ksh 1,000, more than triple the government’s 16 percent value-added tax (VAT) on the item.
“Prices are rising daily as a result of the tax, which we are still battling in court, as well as the importer’s monopoly and the Petroleum Institute of East Africa (PIEA), which is functioning as a cartel,” says Kepher Odongo, secretary-general of the Energy Dealers Association. Although industry participants attribute the increase to the 16 percent VAT and worldwide prices, price hikes have surpassed the tax increase by a large margin. Small gas dealers have accused some of the industry’s big players of collaborating to fix prices and hiding behind the tax.
Cooking gas prices are not regulated by the government like fuel prices, as this would limit the number of investors who would enter the sector. As a result, the country is vulnerable to price adjustments by market participants, who set pricing based on their market share. The government slapped a fee on the commodity’s 16 percent VAT in 2016 in an effort to increase adoption among the poor who rely on filthy kerosene and charcoal for cooking. However, the Finance Act 2020 revised the VAT Act, eliminating the supply of LPG including propane from the list of zero-rated commodities.
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