State Eyes Private Sector Deal for Cheap LPG After NOC Fiasco

Government Shifts Strategy to Public-Private Partnership

After pumping billions to fund cheaper LPG initiatives through the National Oil Corporation (NOC), the Kenyan government is reviving its plan to distribute subsidized liquefied petroleum gas (LPG) cylinders to low-income households. The new strategy shifts from the failed Mwananchi Gas project to a public-private partnership with oil marketing companies (OMCs).

Under the new initiative, the State plans to distribute 9.6 million 6-kg LPG cylinders to households, with selected OMCs matching each unit supplied by the government with their own. This would significantly increase the total number of cylinders issued as the government seeks to boost clean energy adoption and reduce reliance on charcoal and kerosene.

Private Sector to Improve Distribution Efficiency

Energy and Petroleum Regulatory Authority (EPRA) Director-General Daniel Kiptoo noted that partnering with private players would improve distribution efficiency: “This will allow them to leverage existing supply chains to distribute those cylinders,” Kiptoo said.

The move follows a 13.38 percent surge in LPG demand, with consumption reaching 414,861 tonnes in 2024, up from 360,593 tonnes the previous year.

Lessons from Failed Mwananchi Gas Project

The decision to tap private sector players comes after the Mwananchi Gas project, launched in 2016, collapsed due to:

• Inefficiencies in distribution
• Accountability issues
• Defective cylinders

A government audit revealed that 149,773 LPG cylinders distributed through the initial project could not be accounted for as of June 2023. The audit showed the government had pumped Sh1.12 billion into the initiative, but 79,057 units were found to be faulty, leading to the program’s suspension in 2019.

Billions Invested in Failed NOC Initiative

The Treasury had originally allocated Sh2.2 billion for the three-year program (2017-2019) and later increased the amount by more than Sh700 million through a supplementary budget, pushing total funding to Sh3.1 billion.

Auditor General Nancy Gathungu reported: “The items were lying at the warehouses rented by the Ministry and National Oil Corporation of Kenya.” The funds were used for:

• Purchase of LPG cylinders and accessories
• Inspection of cylinders
• Purchase of two-burner low pressure table-top cookers

The government is now banking on the participation of licensed OMCs to ensure better oversight and efficiency, avoiding the pitfalls of the previous rollout.