New LPG infrastructure plan to reduce cooking gas prices in Kenya

The Ministry of Energy and Petroleum in Kenya is spearheading a new initiative aimed at transforming privately owned cooking gas facilities into shared infrastructure, a move that seeks to expand the availability of Liquefied Petroleum Gas (LPG) and reduce its cost for consumers across the country.

The plan, which will be regulated by the Energy and Petroleum Regulatory Authority (EPRA), involves allowing multiple licensed LPG importers to discharge their gas into shared storage terminals.

These common user terminals will open up the LPG market to greater competition, which officials hope will drive down prices and increase supply to meet growing demand.

Under this strategy, the Ministry is working to convert existing privately-owned LPG plants into common user terminals, allowing any company that imports LPG to use them.

This change will help improve the overall efficiency of the LPG supply chain by reducing dependence on individual facilities and promoting a more collaborative approach among industry players.

"We believe that once we implement common user facilities, the cost of cooking gas will go down significantly. This will make it more affordable for Kenyan families and businesses," said Mohammed Liban, Principal Secretary for Petroleum.

He also emphasized that this plan is part of a larger vision to make LPG more accessible and to ultimately achieve a per capita consumption of 15 kilograms by 2030, more than double the current average of seven kilograms.

The Ministry’s plans are also aligned with the broader goal of making LPG a more sustainable and environmentally friendly energy source, reducing reliance on firewood and charcoal, which are harmful to both health and the environment.

By reducing the price of gas, the government hopes to encourage more people to make the switch to LPG, thereby reducing deforestation and improving air quality.

Liban noted that discussions with key industry stakeholders, including Africa Gas and Oil (AGOL) and Kenya Petroleum Refineries Ltd (KPRL), are already underway to make this vision a reality.

AGOL, which currently operates the largest LPG terminal in Kenya, is one of the major players that will benefit from this plan, while KPRL is involved in the development of a new storage facility for gas.

KPRL, which is owned by the Kenya Pipeline Company (KPC), has recently entered into an agreement to lease land to Asharami Synergy, which will build a 30,000-tonne LPG storage terminal.

This new facility will also be open to multiple users and is part of the ongoing efforts to create more common user infrastructure in the country.

Liban explained that by expanding storage capacity and increasing the number of facilities available to private sector players, the government is creating a more competitive market where prices can be driven down through supply and demand dynamics.

He further stated that the overall goal is to make cooking gas more affordable for everyone in Kenya and to foster a sustainable energy transition in the region.

"We are building the necessary infrastructure and encouraging competition among private players to reduce prices and increase supply. This is how we will secure affordable clean energy for Kenyans and protect our forests and the environment," said Liban.

The government has also introduced a bulk procurement system for LPG, which will allow the country to import cooking gas more efficiently.

This system, which was approved by the Cabinet in December, is similar to the Open Tender System (OTS) that was previously used for petroleum products.

However, the government initially faced challenges in implementing such a system for LPG due to a lack of adequate infrastructure.

With the conversion of private terminals into common user facilities, the situation is now improving, and the government is hopeful that the new system will allow them to better regulate the price of cooking gas.

EPRA has already begun contacting the owners of private LPG facilities, informing them that their terminals will need to be converted into common user spaces.

This means that they will need to establish agreements with other industry players to allow the shared use of their storage and distribution facilities.

The tariffs for using these shared facilities will be regulated by Epra, ensuring that prices remain fair and competitive for all parties involved.

“We have made it clear to facility owners that their terminals will become common user facilities. They will be required to establish common user agreements with other players, and the tariffs they charge will be regulated by Epra,” said Edward Kinyua, Director of Petroleum at Epra.

Currently, the AGOL terminal and the Shimanzi Oil Terminal are among the few operational facilities, although Shimanzi is limited by its capacity.

Other facilities, such as a 30,000-tonne terminal by Taifa Gas and a 22,000-tonne terminal by Lake Gas, are still in development but are expected to contribute significantly to the LPG supply chain once they are completed.

A recent inspection of Lake Gas’ onshore and offshore facilities showed significant progress, with the facility now having the capacity to store 10,000 tonnes of gas.

This inspection highlighted the importance of expanding storage and distribution capacity to meet future demand.

The government’s LPG expansion plan also includes providing cooking gas infrastructure to public institutions, such as schools.

Recently, Liban visited schools in Mombasa, including Bahari Girls and Shimo La Tewa National School, to see how the shift to LPG has impacted school kitchens.

Bahari Girls’ Principal Sylvano Hamaro highlighted the benefits of using cooking gas, explaining that the school had previously spent considerable amounts on firewood and charcoal, which also posed health risks to staff due to smoke exposure.

Now, with LPG in place, the school is saving both time and money, and the kitchen environment has improved.

Shimo La Tewa Principal Mathew Mutiso echoed these sentiments, stating that the switch to LPG had improved the speed of meal preparation and created a cleaner, safer kitchen environment.