Sigh as Cooking Gas Prices to Drop by Sh430 per 13-kilo Cylinder

If Parliament adopts a government proposal to eliminate three tariffs on cooking gas, costs for the 13-kilogram container will drop by about Sh430.

According to a brief from State House on Thursday, the William Ruto administration would seek MPs to exclude cooking gas from Value Added Tax (VAT), Import Declaration Fees, and the two percent Railway Development Levy through the Finance Bill 2023.

As part of the transition to clean cooking by 2030, President Ruto has established an ambitious proposal to remove taxes on cooking gas tax-free in an effort to make it cheaper, especially among low-income homes.

Before June, the Finance Bill 2023 will be tabled in Parliament.

The VAT and the present record-high price of crude oil are the main causes of the record-high cost of cooking gas, with the 13 kilogram weighing in at an average of Sh3,300.

“To reduce the cost of liquefied petroleum gas (LPG) and make it affordable, reduce the use of biomass fuel and destroy our forests, the Bill proposes to exempt LPG from VAT,” reads the State House brief.

“It further proposes to exempt LPG from Railway Development Levy (RDL) and Import Declaration Fees (IDF).”

Based on the existing prices, the proposal will reduce the 13 kg price by Sh256 for VAT, Sh112 for IDF, and Sh64 for RDL.

In July 2021, Parliament reintroduced the 16 percent VAT on cooking gas that had been frozen for five years while the government worked to reduce costs and increase uptake.

As a result of the tax return and rising costs everywhere, gas prices increased by as much as Sh350. While the tax was cut in half last year, prices did not decrease as much as was expected.

If the plan is approved, the only tax on cooking gas will continue to be the Sh0.40 per kilogram Petroleum Development Levy.

According to official data, cooking gas is used in 24% of Kenyan homes, trailing only firewood in terms of popularity.

Despite Mr. Ruto’s assurances that the prices will drop by at least Sh300, it is unclear if the measures will also apply to cooking gas cylinders.

Cooking gas cylinders are subject to an eight percent VAT, 3.5 percent IDF, and two percent RDL on the cost, insurance, and freight per container.