East Africa and Great Lakes region consumers are expected to benefit from a decline in the cost of new Liquefied Petroleum Gas (LPG) cylinder manufactured locally next quarter.
The new $10 million state- of-the-art facility will manufacture LPG cylinders at a much reduced cost of up to 20 per cent compared with the existing cost and will encourage use of LPG as an efficient clean source of energy.
The manufacturing plant of Allied East Africa Ltd (AEAL) located at Kitengela on Nairobi’s outskirts will reduce the cost of new LPG cylinders (vessels) by about 20 per cent when production starts in mid second quarter of 2013.
AEAL’s managing director Mr Hamza Ali said the indigenous firm will import steel coils and plates from international suppliers to manufacture competitively priced high quality 6, 13, 25 and 40 or 50 Kilogramme LPG Cylinders.
“Our production strategy is to manufacture and re-validate LPG cylinders using precision equipment and automated processes as installation and commissioning of the plant and equipment imported from Europe is completed” he said.
The firm’s manufacturing plant located on a five acre piece of land will initially produce 3,000 cylinders per day and increase production gradually as demand grows. Finished products will be delivered to customers in less than 15 days compared to a lead time of four months that LPG cylinder imports take to arrive in the country.
LPG Cylinders are mainly imported from Asia, with Thailand being the leading supplier.
Kenya used about 105,000 metric tonnes of LPG in 2012, translating to a per capita consumption of 2.5 Kg compared to an average of 13 Kg for Senegal. Kenya’s usage of gas is higher compared to other countries in East Africa.
“First time buyers of LPG cylinders and accessories have to contend with high cost because of 16 per cent value added tax (VAT) and 25 per cent import duty,” said Hydrocarbons Lead Consultant Mr Robert Shisoka. Tanzania is the only country in East Africa that zero rated tax on LPG cylinders, cookers and accessories.