High cost of energy in March hurts Kenya households

Money Markets

A cooking gas outlet. Energy costs account for up to 20 per cent of a household’s budget. Photo/FILE 

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com

In Summary

• The price of cooking gas has risen to Sh3,100 for a 13kg cylinder over the past year, with charcoal retailing at Sh74 for a four kilogramme tin.
• Kerosene is listed at an average price of Sh84.65 per litre in the latest Kenya National Bureau of Statistics data.
• Energy costs account for up to 20 per cent of a household’s budget.

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Households are grappling with higher energy costs as prices of Liquefied Petroleum Gas (LPG), charcoal and kerosene rise in March.

The price of cooking gas has risen to Sh3,100 on average for a 13 kilogramme cylinder over the past year, with charcoal retailing at Sh74 for a four kilogramme tin.

Kerosene is listed at an average price of Sh84.65 per litre in the latest Kenya National Bureau of Statistics data.

The cost of cooking gas has gone up by 7.4 per cent from Sh2,882 in March 2013 following the introduction of VAT on gas cylinders and the closure of Kenya Petroleum Refineries Limited.

“About 40 per cent of LPG that was coming from crude oil refining now has to come from more expensive imports,” Petroleum Focus managing director George Wachira said.

With the closure of the refinery, Kenyans were betting on commissioning of an LPG import facility in Mombasa to stabilise prices because of economies of scale in import costs, but the facility is yet to be opened.

In February, Energy Regulatory Commission (ERC) director for petroleum Linus Gitonga said tests on the 14 million litres depot had been done, but modalities of handling by oil marketers were being negotiated.

Energy costs account for up to 20 per cent of a household’s budget.

“Between February and March 2014, housing, water, electricity, gas and other fuel Index increased by 0.28 per cent. This was mainly due to observed higher prices of common cooking fuels including kerosene and cooking gas,” said KNBS in its monthly inflation report for March.

READ: VAT pushes cost of cooking gas to two-year high

The cost of electricity remained flat between February and March, offering some respite to households, with 50 units costing Sh515.70 and Sh516.20 in the two months respectively.

Year on year, however, the cost of power has dropped by 19.1 per cent, with the 50 units having cost Sh638 in March 2013.

Electricity is expected to become cheaper in the long run as more expensive thermal power plants are retired in favour of renewable sources, geothermal power in particular.

In February, kerosene was retailing at an average of Sh83.83. ERC, however, raised pump prices on March 14 indicating the price for Nairobi as Sh83.91 per litre, Mombasa Sh81.12, Nakuru Sh84.67 and Kisumu Sh85.69.

Charcoal prices have gone up by a tenth over the past year from Sh67 to Sh74 for a four kilogramme tin. In Nairobi the price ranges between Sh1,600 and Sh1,800 for charcoal packed in 100 kilogramme bags.