The waiver of the 17% tax was aimed at encouraging dealers in the gas also knows as Liquefied Petroleum Gas (LPG), to reduce the cost of their services to the end-user, which in turn would increase the demand for the gas especially in homesteads.
The waiver of Value Added Tax off cooking gas is yet to bear
fruit, with dealers saying there is no apparent change in the demand since June
The waiver of the 17% tax was aimed at encouraging dealers in the
gas also knows as Liquefied Petroleum Gas (LPG), to reduce the cost of their
services to the end-user, which in turn would increase the demand for the gas
especially in homesteads.
Increased usage of LPG is expected to reduce pressure on deforestation by
replacing the use of charcoal and firewood by households.
The government also hopes this will reduce the effect of emissions
on human health and mainly child mortality.
According to the revised National Energy Policy, the use of
inefficient cooking devices combined with unsuitable cooking spaces is
responsible for 8.2 percent of infant deaths in Uganda.
“This is due to exposure to indoor air pollution (IAP) resulting from use of
unclean inefficient fuels, predominantly charcoal and fuel wood”, says the
However, according to dealers, there are about 1 million active LPG units in
households around the country, just about the same as it was before the waiver
The Ministry of Energy and Mineral Development says plans are
underway for more measures that will help poorer Ugandans acquire LPG units,
including possible credit facilities like hire purchase.
The waiver of the tax led to a reduction on the cost of refilling
by about 7,000 Shillings for a 6-kg cylinder to 49,000-50,000 Shillings with
corresponding reductions in the cost for other sizes.
Aloysius Kasoma, a dealer in LPG says the more established
petroleum products distributors have retained their customers and find it
easier to attract new ones than the smaller new companies because they already
have a brand.
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At the older and bigger companies, like Shell and Total, a 6-kg
cylinder costs 49,000 Shillings to refill while a new one goes
for 180,000 Shillings. The ordinary 6-kg cylinder without a banner costs
The dealers say that these are the standard market prices but that
there are cheaper sources especially as smaller dealers look to penetrate the
Kasoma says the traders who are registered companies and have
contracts with the established petroleum companies can get the product at
cheaper prices, and this is even easier when the can buy in bulk.
He says that here when they get the cylinders at as low as 35,000
Shilli8ngs, the cost to the end-user is also expected to be lower.
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Some of the newer dealers like Stabex International and Abasi Gas
Technologies sell the 6-kg cylinder between 135,000 Shillings and 140,000,
while refilling will cost 40,000 Shillings.
The companies are still quoting promotional prices to be able to
penetrate the market.
Recently,thetotal has also joined the government efforts to sensitize the public
on the importance of using LPG for cooking and other uses, as opposed to using
firewood and charcoal, including displaying them closer to areas more
accessible to the public.
Companies are also trying to work together to promote LPG usage
including supporting multi-vendor products, where, for example, Stabex Gas can
be got at Stabex, Gaz, Fuelex, and other stations.
According to the National Policy, other limitations to the growth
of the market include Inadequate regulations, technical standards and
certification of LPG cylinders and accessories, lack of safety standards for
LPG filling stations, high upfront costs for LPG cylinders, accessories and
products as well as lack of financing schemes for starter-kit LPG accessories
for potential users.
It adds that inadequate market development for LPG has led to
limited investments, unreliable supply, over-reliance on imports and limited-service
points, especially in rural areas Policy Statements.
It is for these reasons that the Government plans to promote
access to affordable, reliable and clean LPG energy services by developing,
monitoring and enforcing comprehensive LPG regulations and standards. It
also plans to develop a framework for cylinder and accessory equipment
certification, among others.
The policy also supports the development of Central and Regional LPG
storage and distribution infrastructure facilities to ensure the availability
of stock for sustainable supply.
The National Policy also provides for incentives for increased LPG usage,
including free starter-kits distribution for first-time users.