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    Secret plan to reinstate former Nairobi Governor revealed

    Secret plan to reinstate former Nairobi Governor revealed

    Oil price rises 1% on U.S. stimulus hopes, supply concerns

    JKIAs’ Digital Health Screening cut time to 15 minutes

    JKIAs’ Digital Health Screening cut time to 15 minutes

    Global Cyber Alliance, Serianu to Reduce Cost of Cybersecurity in Kenya

    Global Cyber Alliance, Serianu to Reduce Cost of Cybersecurity in Kenya

    Samsung Galaxy S21 is now out,pre orders open in Kenya

    Samsung and Safaricom ink a deal for Galaxy S21 preorders

    Ann Kananu takes over as Deputy Governor but….

    Nairobi County DG Kananu’s first meeting

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    Kenyans to pay tax for online classes

    Kenya Power launch new electricity meters

    Kenya Power launch new electricity meters

    Mediamax Network Limited, Owners Of K24Tv, settles on Ken Ngaruiya as CEO

    Mediamax Network Limited, Owners Of K24Tv, settles on Ken Ngaruiya as CEO

  • Markets
    Samsung Galaxy S21 is now out,pre orders open in Kenya

    Samsung and Safaricom ink a deal for Galaxy S21 preorders

    Kenya Power launch new electricity meters

    Kenya Power launch new electricity meters

    Spending on IT Predicted to pass Ksh. 7.7 trillion in 2021

    Spending on IT Predicted to pass Ksh. 7.7 trillion in 2021

    Wireless Earbuds to set the Tech-Trend in 2021

    Wireless Earbuds to set the Tech-Trend in 2021

    Kenya Airways Suspends flights to France

    Kenya Airways Suspends flights to France

    Nokia launches low cost smartphones for the Kenyan market

    Nokia launches low cost smartphones for the Kenyan market

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    Exclusive: What it Takes to Lead a Multi billion Sacco in Kenya

    Kenyan PR agency bags international award

    Kenyan PR agency bags international award

    Startimes land broadcast rights for Continental showpiece

    Startimes land broadcast rights for Continental showpiece

  • Real Estate
    OP-ED: Affordable housing will decongest slums and cushion the poor from pandemics

    Kenya’s real estate to remain neutral in 2021 – Report

    Tatu City partners with Konza to attract investors to Kenya

    Tatu City partners with Konza to attract investors to Kenya

    Tatu City Partners with Konza to Attract Investors to Kenya

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    Kenyan Firm awarded Most Innovative Community Developer 

    Cytonn Real Estate completes The Alma Phase 3; 120 units set for handover

  • Tech
    Samsung Galaxy S21 is now out,pre orders open in Kenya

    Samsung and Safaricom ink a deal for Galaxy S21 preorders

    Spending on IT Predicted to pass Ksh. 7.7 trillion in 2021

    Spending on IT Predicted to pass Ksh. 7.7 trillion in 2021

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    Wireless Earbuds to set the Tech-Trend in 2021

    Nokia launches low cost smartphones for the Kenyan market

    Nokia launches low cost smartphones for the Kenyan market

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    Pesalink appoints Gituku Kirika as CEO

    Pesalink appoints Gituku Kirika as CEO

    Samsung Galaxy S21 is now out,pre orders open in Kenya

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    Samsung banking on technology personalisation to increase market share

    Samsung banking on technology personalisation to increase market share

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    Celebrated US broadcaster Larry King has died at the age of 87

    Celebrated US broadcaster Larry King has died at the age of 87

    Defiant: Words such as ‘China virus’, ‘impossible Paris climate deal’ mark Donald Trump’s speech as he bids farewell to USA

    Defiant: Words such as ‘China virus’, ‘impossible Paris climate deal’ mark Donald Trump’s speech as he bids farewell to USA

    Twitter CEO finally breaks silence about banning US President Donald Trump from the platform

    Millions Abandon Whatsapp over new Contentious Policy, Signal, Telegram record growth

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    Trump threatens to slash US funding to World Health Organization

    A year later, WHO still insists on visiting China to probe virus origin

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    Boeing’s 737 Max Cleared to Fly in the US After Crashes

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    Guinness forced to recall contaminated brand

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  • KBF
    • All
    • Agribusiness
    • Banking
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    Family Bank voted best bank in customer relations

    Family Bank voted best bank in customer relations

    Global Cyber Alliance, Serianu to Reduce Cost of Cybersecurity in Kenya

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    Kenyans to pay tax for online classes

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    Kenya Power launch new electricity meters

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    Spending on IT Predicted to pass Ksh. 7.7 trillion in 2021

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      DTB issues profit warning

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      How to join, get a loan from Metropolitan Sacco

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LPG regulations lead the way in reshaping consumer behaviour and industry

by Neymar
August 22, 2019
in KBF, Opinion
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By Mr Olagoke Aluko, Chairman Petroleum Institute of East Africa (PIEA)

Kenya has paid a heavy price in lives lost for its slow uptake of LPG as a cooking fuel.

As recently as 2018, data from the National Bureau of Statistics on Kenya Integrated Household Budget Survey indicated that 84% of households use firewood as their primary fuel in the home, creating a deadly cocktail of smokes that still kills approximately 21500 Kenyans a year.

In children, the smoke-filled air is the equivalent of smoking 400 cigarettes in an hour, researchers report and sets up a vulnerability to pneumonia and other respiratory diseases that are now the country’s top five killers: with 14 million Kenyans affected by respiratory diseases that account for 40 per cent of childhood deaths.

It’s a trail of mortality that a decade ago saw the country move to shift the nation to cooking with clean-burning, smoke-free LPG. In 2009, LPG regulations came into force to encourage greater uptake. They worked, to some degree, delivering a step-change in the number of Kenyan using LPG from 1 to approximately 2.5 kilograms per capita per year by 2016.

But while consumption rose from 1kg to 2.5 kg per person per year, it then began to plateau, far short of the government target of 10 kg to 15 kgs per person per year.

Yet countries such as Senegal that have converted to gas as the principal cooking fuel use LPG at a rate of 12 kg per head per year.

Importing hefty, safe gas cylinders from manufacturers across the world and transporting them into Kenya required significant spending. Yet, 80 per cent of brands’ cylinders were vanishing to be refilled by others, or competitors were holding each other’s cylinders to create demand for their own.

Overall, slowness in the system of exchanging brands’ cylinders increased the turnaround time, effectively reducing the revenue per cylinder. In this, the World Bank reports that optimising LPG revenues requires at least one to two cylinders in the supply chain, being refilled, bottled, stored or transported, for every one cylinder in the home.

Moreover, the untracked, free flow of cylinders was also generating safety issues. Rising numbers of cylinders were being illegally refilled without full safety checks, causing leakages and explosions in the home. Indeed, three of Kenya’s largest insurance firms reported that domestic claims were being driven by LPG-related incidents.

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There was also disarray on who was liable for the safety issues, with few cylinders (around one in five) being refilled by the original brand owner marked on the cylinder, yet oil marketers were sued for other unauthorised re-fillers’ safety breaches

In the end, oil marketers needed to regain control over their cylinders or exit the Kenyan market – as one multinational did in 2017.

Unpaid debts of over KSh one billion through the mutual exchange pool were also hurting the sector, taking two marketers out of business completely.

Meanwhile, the plan of setting up of bulk distribution storage and filling depots by the government had stalled as had private sector investments due to the high risks and increased operational costs from an unlevelled playing field.

Yet the new regulations are now set to change that narrative – demonstrating how critical regulations are to defining the structure and success of an industry.

The interchangeability of LPG cylinders from different brands has been terminated, meaning that the only place to take an empty cylinder for a filled one is back to the authorised retailer for that brand.

Other countries, like South Africa and Turkey, have clear regulations that prohibit cross-filling of cylinders, ensuring that every cylinder is insured, and clearly labelled. This has formed a foundation that has seen LPG consumption reach 15kg per capita in Turkey and 6kg per head in South Africa.

The Kenyan government also now plans to construct a 2,000 metric tons LPG distribution and filling depot in Nairobi, followed by smaller regional depots in Kisumu, Eldoret, Nakuru and Sagana to ease distribution to rural areas.

This renewed public investment and the changing of the rules of engagement for the industry stand to benefit everyone.

Consumers will now get cylinders from brands that are fully liable for any failure – with added protection through safety instructions on every cylinder.

For oil marketers, back in control of their own supply chain, investment is set to recommence.

And for Kenya, as LPG moves to dominate as the country’s cooking fuel, one small change in regulation removing interchangeability will prevent thousands of deaths, maintain the country’s water catchment areas that have been failing on deforestation, and transform the investment outlook for oil marketers.

Thus do the new regulations show how statutory frameworks define consumer behaviour, industry structure and success, and the shaping of the nation, making every regulatory debate a vital one to our nation’s future.


Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]

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