NAIROBI, Kenya – The Energy and Petroleum Regulatory Authority (EPRA) is set to implement retail price controls and an Open Tender System (OTS) for the importation of Liquefied Petroleum Gas (LPG).
This initiative, approved by the Cabinet in December, seeks to dismantle the existing monopoly in the industry and boost the use of clean energy across Kenyan households.
The government’s strategy aims to double the annual per capita consumption of LPG from 7 kilograms to 15 kilograms and expand the penetration of clean energy from the current 24% to an ambitious 70% by 2028.
A comprehensive study conducted by Kurrent Technologies Ltd and Channoil Consulting Ltd provided the groundwork for these changes.
The analysis recommended a pricing mechanism reflective of market conditions, potentially ready for rollout by mid-year.
Currently, the absence of price regulation in the LPG sector has left consumers vulnerable to arbitrary markups by importers and retailers.
By introducing an OTS, the government expects increased competition among oil marketing companies, reducing costs and enhancing efficiency in the supply chain.
The OTS system will adopt a pricing formula similar to that used for petrol, diesel, and kerosene, factoring in the landed cost of products, cargo volumes, and unit costs.
This formula aims to cap retail and wholesale prices, shielding consumers from exorbitant charges.
In addition to LPG reforms, the Cabinet has also approved the centralized bulk procurement of heavy fuel oil and bitumen.
This effort is part of a broader strategy to streamline fuel imports and foster competitive pricing.
The government is collaborating with the private sector to establish a common-user import facility at the Kenya Petroleum Refineries Limited (KPRL) in Mombasa, enhancing storage and distribution capabilities.
During a December event at Jamhuri High School in Nairobi, President William Ruto highlighted the broader economic benefits of a thriving LPG sector, including increased investment and job creation.
He underscored the government’s commitment to developing robust policies and standards to ensure the sector’s sustainable growth while prioritizing health and safety.
The planned reforms are expected to end the dominance of Africa Gas and Oil Ltd, which currently controls 90% of the imported LPG volumes with a 10,000-tonne storage facility in Mombasa.
According to EPRA data, demand for LPG grew by 8% in 2023, reaching 360,594 metric tonnes, reflecting the urgent need for more efficient and competitive supply mechanisms.
