Cooking Gas Prices Return To Previous Highs Despite VAT Removal

• The average cost of refilling a 13-kilogram cylinder of LPG has surged back to levels observed before the VAT tax exemption
• Official KNBS data for November reveals that households paid an average of KSh 3,031 for a 13kg LPG cylinder refill
• This is close to the KSh 3,069 price tag in June when the eight percent VAT was last applicable and more than KSh 3,004 recorded in November 2022

Elijah Ntongai, a journalist at TUKO.co.ke, leverages more than three years of expertise in financial, business, and technology research, providing profound insights into Kenyan and global economic trends.

Data collected by the Kenya National Bureau of Statistics (KNBS) has shown that the price of cooking gas has increased to the high levels recorded before the government scrapped VAT on liquefied petroleum gas (LPG).

The average cost of refilling a 13-kilogram cylinder of LPG has surged back to levels observed before the VAT tax exemption in the government's initial efforts to lower prices and encourage the transition to clean energy.

Official KNBS data for November reveals that households paid an average of KSh 3,031 for a 13kg LPG cylinder refill, closely mirroring the KSh 3,069 price tag in June when the eight percent VAT was last applicable and more than KSh 3,004 recorded in November 2022.

Prices rise despite VAT exemptions

The 8% VAT was last applied on LPG in June; however, the cost of cooking gas has been steadily increasing to surpass the prices recorded in November 2022, when VAT was charged on LPG.

The short-lived reprieve to consumers has seen many question the effectiveness of VAT exemptions in tackling the cost of cooking gas.

What are the global trends in prices of natural gas?

The increase in the cost of LPG in Kenya is experienced despite the recent decline in prices of natural gas in global markets.

The global trends show that the prices of natural gas have been falling since November 2023.

Photo: screenshot from Rigzone website

Raila demands drop in petrol prices

Raila Odinga stated that the Energy and Petroleum Regulatory Authority (EPRA) should promptly lower petroleum prices to reflect the global market's decline, deeming it unjust to leave Kenyans without relief from the economic strain induced by the soaring cost of living.

"We are aware that fuel prices have dropped internationally. We are expecting the reduction this month to be by at least KSh 45 for a litre, or even KSh 50, not KSh 5," he said.

Gas retailers

Speaking to TUKO.co.ke, Mike, a cooking gas retailer in Nairobi, claimed that the exemptions were just a way of creating loopholes for some people or companies to accrue profits. He cited the lack of price relief to the consumer even after VAT exemptions.

"It beats the purpose when the prices right now are similar to the period before they removed VAT. Some people are just making too much profit with the exemptions because nobody is looking and people just accept it without asking questions," Mike told TUKO.co.ke.

"The trick they use is to increase the prices in small amounts at a time. For example in the last two months, I have had to increase the prices three times by KSh 50 and with the new stock, a 6kg gas cylinder is now 1300," added Mike.

Man shows how to make cooking gas last long

In other related news, a short video of a man showing people how they could make their cooking gas last longer sparked reactions online.

Some pointed safety concerns of trying to tamper with cooking gas. A thorough look at the video shared by @user62799908533272 revealed he was using what he called "Fuel Factor X". People said they would not try it.

"I used my 12kg gas cylinder for eight months," said a woman in the video.