Opportunities in gas business

Posted on Thursday, 21 July 2011 and filed under business . You can follow any responses to this entry through theRSS 2.0 . You can leave a response or trackback to this entry from your site

Cooking gas, also called Liquefied Petroleum Gas ( LPG ), is among products whose market is yet to be fully exploited in Kenya.

The product is no longer considered a fuel for the upper and middle income households as many lower income earners are shifting to it for domestic cooking.

As rural electrification lights up households in remote Kenya, the same families are turning to LPG for cooking.

The Energy ministry has put in place a policy to increase LPG consumption with a view to reducing use of biomass (firewood and charcoal).

This is meant to increase the national forest cover from the current 1.7 per cent to 10 per cent.

Other East African countries have similar policies that consider LPG use one of the solutions to deforestation.

Dependence on biomass fuels for cooking and heating stands at about 80 per cent in Kenya.

Another reason for advocacy on LPG use is health motivated. It is a clean fuel, unlike firewood, charcoal, and kerosene which emit gasses that are largely harmful.

Particles contained in firewood and kerosene smoke contribute to respiratory illnesses. The pollutants are more pronounced in rural homes with inadequate ventilation.

Details emerging at the World LPG Association conference held in Nairobi recently indicate that Kenya’s annual cooking gas per capita consumption is only two kilogrammes.

Consumption

This is very low compared with her peers in sub-Saharan Africa. Senegal has a per capita usage of 10kg per year, Ivory Coast 9kg, South Africa 6kg, and Ghana 5kg.

North African counties have achieved an average LPG per capita consumption of about 55kg per annum. In these countries, high cooking gas use has been achieved mainly through government driven policies that promote availability and affordability.

Issues that limit LPG market penetration in Kenya include unavailability, unaffordability, lack of public awareness, and poor distribution infrastructure.

Interventions by the government have been both fiscal and regulatory. To make LPG more affordable, the government has zero-rated taxes on the product. It is also working on modalities to remove taxes on LPG cylinders and other appliances. The Energy Regulatory Commission’s recent intervention has impacted on the cooking gas market.

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