Regional projects for cheap LPG to homes in Kenya face headwinds

Thousands of frustrated Ugandan households will be switching back to wood fuel after a government project that would have seen them shift to clean energy ran into logistical challenges after covering just nine percent of the targeted population since July last year.

The stall in the subsidised cooking gas project joins Kenya’s own initial idea of supplying cheaper cooking gas to homes, which collapsed due to corruption, lack of funds and poor-quality cylinders that were found to be a danger to households.

“I’ve given up after waiting for nine months. I can’t find the cylinders anywhere,” said a frustrated customer Lydia Naluswata, who operates a fast food restaurant at Seguku along the Kampala-Entebbe road.

Starter kits

In July last year, Naluswata missed out on the initial distribution of starter kits and was lined up for the next consignment in December only to be told her kit would be delivered in March this year. Last week she gave up after visiting several points of sale, where each time she was told to check again in May or June.

In Uganda, The EastAfrican learnt that the government has so far received and distributed only 9,000 kits, with a further 6,500 kits expected in April.

On July 5, 2021, Energy Minister Ruth Nankabirwa announced Uganda would distribute one million LPG starter kits that include a locally manufactured 13kg cylinder, accessories, and a cook stove. These were meant to ease families’ entry into the bracket of cooking gas users. So far, just about 0.8 percent of Ugandan homes use gas to cook.

“We know that the upfront payment for the starter kit has been a bottleneck for many families to convert from using biomass to LPG,” said Nankabirwa.

Stock-outs

The distribution of free cooking gas kits mid-last year in Uganda triggered a 29.4 percent drop in cooking gas prices, but stock-outs of government-subsidised LPG have since seen prices climb back to previous rates.

The initial cost of the subsidised kit, with accessories, was Ush300,000 ($80.26) for the 13kg pack and Ush189,000 ($50.56) for the 6kg one.

To refill the 13kg cooking gas cylinder under the scheme, users pay around Ush100,000 ($26.7).

Currently, on average, it costs Ush126,000 ($33.7) to refill a 13kg LPG metal cylinder, while the 6kg can – the fastest-selling and most affordable unit – costs Ush55,000 ($14.7).

The Ministry of Energy contracted Ugandan firm Burhani Engineering and Cylinder Manufacturing Industry Ltd to produce and supply the cylinders after the government identified that the tax component on imported LPG cans was prohibitive to uptake and usage.

Partners

To ease LPG access to users, the government partnered with three oil marketers – Vivo Energy, TotalEnergies, and Stabex International – to stock and distribute to first-time recipients, as well as sell cooking gas at refilling.

Cylinders under this project are labelled a definitive yellow. A survey of refilling stations within the Kampala metropolitan shows these cylinders are out of stock.

Boniface Kipchirchir, the head of operations at Stabex International Uganda, says the company still has “some gas in stock but only for the refill and not for new applicants.”

Solomon Muyita, the spokesperson at the Ministry of Energy, explained that the production of cylinders not only proved “quite laborious” for the manufacturer but is also faced with further delays at different government agencies due to quality control.

Private manufacturer

“You know we are using a private manufacturer, and there has been a delay in the delivery of consignments,” he said. He added that since launch, the producer had delivered 9,000 kits.

Each of the East African countries has been trying to shift from firewood and charcoal use to cleaner gas in a bid to save forests. But there have been hurdles.

In Kenya, the multimillion-dollar Mwananchi Gas project that would have seen millions of households receive subsidised cooking gas cylinders for $20 ended in a fraud investigation.

Then Petroleum and Mining Ministry Principal Secretary Andrew Kamau said in 2018 when it collapsed that a cash crunch had also pushed it aside as the government grappled with budget deficits.

Failed quality standards

Four million households were targeted with the Gas Yetu six-kilogramme cylinders fitted with burners and grills. It later turned out the firm contracted to supply some 67,000 cylinders failed to meet safety and quality standards.

The initial tender for the purchase of 357,000 gas cylinders was valued at Ksh778 million ($5.92 million). Kenya later cancelled two other tenders to procure close to 700,000 cylinders, citing a lack of funds.

Uganda’s LPG strategy targets 30 percent of households by 2030. Later, it will be scaled up on expected oil extraction from the Lake Albert oil and gas projects. From here, Kampala targets to have at least 300,000 tons of LPG accessible under the subsidised programme.

Below average

Uganda’s uptake of cooking gas remains below the sub-Saharan African average, according to a study titled “Evaluating the Energy Requirements for Uganda: Case for Natural Gas”, published in the International Journal of Energy and Environmental Science in August 2021. The study discovered that the average LPG consumption per capita is 0.2-0.5kg per year, lower than the sub-Saharan African countries’ average of 3kg per year.

The study also established that even though 22 percent of the population can afford LPG, less than one percent use it due to negative attitudes, safety concerns, difficulty in access and the high initial cost.

Across East Africa, Kenya has the most developed LPG market with per capita consumption of 8kg, or 55 percent uptake in urban areas and five percent in rural places. It is targeting 15kg per capita consumption by 2030, according to the Energy and Petroleum Regulatory Authority.

Tanzania’s energy regulator, on the other hand, says the country’s LPG annual consumption grew from 5,500 metric tonnes in 2005 to 145,800 metric tonnes in 2019, but notes that per capita consumption is four times lower than Kenya’s. Meanwhile, as of 2020, 5.6 percent of Rwanda’s households used LPG for cooking, up from 2.4 percent in 2016, according to the National LPG Master Plan.