The price of cooking gas will rise in the coming days due to a spike in global prices for components used in its production, hurting households that are already grappling with higher bills for other fuels.
Prices of butane and propane, two ingredients used in producing LPG, have surged in the past few months on increased demand and low supply in the Gulf countries — the main source of Kenya’s cooking gas.
The expected rise in gas prices comes weeks after the State imposed a 16 per cent value added tax on the product, pushing the cost of the commodity to a six-year high.
The price of propane has jumped 42.01 per cent in the past three months to $1.27 (Sh140.34) per gallon while butane has risen 28.6 per cent in the period to $675 (Sh74,587.50)per gallon, further putting pressure on local cooking gas prices.
Crude prices
Global prices take up to two months to reflect on local LPG costs, signalling that households will pay more for the commodity in the coming weeks.
“Crude prices have been increasing and today closed at $80 (Sh8,840) per barrel,” Mr Powell Maimba, a petroleum expert told the Nation. This means “there will be an increase in the cost of refining crude and consequently cooking gas imports from the source markets in the Gulf will come at higher prices.”
Global oil prices rallied to a three-year high of $80 (Sh8,840) a barrel this week, setting the stage for increased cost of other end products.
A surge in demand for propane on the economic reopening from the coronavirus-induced lockdowns and low supply of the commodity, has triggered the rise in prices.
Series of outages
Butane and propane supply has also been hit by a series of outages and planned maintenance in source markets as countries respond to the surge in demand from the lows of last year when Covid-19 disrupted activities globally.
Saudi Arabia, United Arab Emirates and Singapore are the key sources of the cooking gas used in Kenya.
LPG prices hit a six-year high on re-introduction of the 16 per cent VAT tax from July. The 13-kilogramme gas has averaged Sh2, 400 while the six-kilogramme model is averaging Sh1,300.
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