Reports of residents in Nairobi’s slum areas burning plastics and gunny bags to cook their meals seem to have sped up a plan by the government to use Tanzania’s vast gas deposits to reduce the cost of cooking gas, while also making itself the liquid petroleum gas (LPG) capital of east Africa.
In the last two years, the price of gas has more than doubled in the country. A six-kilo gas cylinder is now going for $12.40 from $5.80 in 2020. The introduction of a new 16% tax last year caused the price hike, and not even slashing it by half is making life easier as suppliers are delaying a price reduction. And after president William Ruto removed a critical fuel subsidy last month, using electricity to cook became more expensive.
But Ruto visited his Tanzanian counterpart Samia Suluhu Hassan on Oct. 10, and talks centered on a Memorandum of Understanding on natural gas transportation signed last year between the two countries during former president Uhuru Kenyatta’s reign.
The $1.1 billion, 600-km natural gas pipeline will run from the Mtwara plant, located 396 km south east of the capital Dar es Salaam, to Kenya’s coastal city of Mombasa, and then to Nairobi.
“We will expedite the gas pipeline so that we can use the resources that we have to lower energy tariffs both for commercial and domestic use in Kenya,” Ruto said during a joint press briefing with Hassan. Ruto wants the project to kick off “in the shortest time possible.” There are currently no estimates of gas price reduction rate resulting from the new facility.
At an estimated 57 trillion cubic feet of gas reserves both in the Indian Ocean and offshore, Tanzania holds east Africa largest gas deposits, with an annual production of 110 billion cubic feet from three fields: Songo Songo, Mnazi Bay, and Kiliwani. The country is looking to unlock $40 billion in foreign direct investments in its gas sector by 2025.
The government plans to use the new gas pipeline to dominate east Africa’s LPG market by constructing a 25,000-ton import and storage gas facility—the region’s largest—in Mombasa to counter Tanzania’s dominance in the business. With the port of Mombasa gradually losing business to Dar es Salaam, Kenya is injecting injecting $350 million to reinforce its grip as the port business hub of the region.
Kenya Petroleum Company estimates the new facility will lower LPG prices by 30% once operational. “KPC proposes to install, commission, and operate a 500 tons per day LPG truck loading facility which will enhance product evacuation,” a June tender document by the company reads.
However, climate activists have criticized Africa’s gas projects, saying the continent should tap solar power and stop relying on non-renewables.