Government's subsidised gas project in limbo as millions of cylinders lie unused due to lack of funds, audit shows

Thousands of LPG cylinders meant for low-income households remain unused as the government’s subsidised Mwananchi Gas project stalls due to a lack of funds, an audit has revealed.

According to the report, only 5,444 out of 161,448 six-kilogramme cylinders have been filled with gas, raising doubts over the viability of the clean energy initiative launched in 2016.

The project, intended to promote the use of modern cooking fuels in low-income homes, has been plagued by financial and operational hurdles, with its implementation now described as uncertain by the Office of the Auditor General.

Initially managed by the State Department for Petroleum, the Mwananchi Gas initiative was transferred to the National Oil Corporation of Kenya (OCK) through a letter dated September 16, 2021. The government’s goal was to distribute subsidised LPG cylinders, grills and burners to households, with the proceeds from sales meant to fund the continuous supply of gas.

However, the audit shows that the pilot phase, scheduled to begin in the 2020/2021 financial year, never took off as planned due to Nock’s lack of sufficient working capital to fill the cylinders.

“Implementation of the project was uncertain due to what management attributed to a lack of sufficient working capital,” Auditor General Nancy Gathungu says in the report dated December 24, 2024 and released to the public in July.

By the end of the financial year on June 30, 2024, the Auditor General found that the Corporation held 161,448 six-kilogram cylinders, yet only 5,444 had been filled with gas. Also in storage were hundreds of thousands of other components procured for the programme, including grills, burners, horse pipes and double burner stoves.

Despite this massive stockpile, only 11,675 cylinders, 12,869 burners and 87,147 grills, valued at Sh20.5 million, had been entered into Nock’s financial statements. The Corporation claimed it had not formally included the rest of the items because the State Department had not officially transferred ownership.

“The value for money on the expenditure incurred on the project could not be confirmed,” the Auditor General said, citing both the uncertain implementation and the lack of formal asset transfer.

Further scrutiny revealed that 88,248 LPG cylinders stored at Nock’s Nairobi National Terminal were defective, raising more questions about procurement integrity. The defective units, valued at Sh155.8 million, were still listed in inventory but remained idle and continued to depreciate in value.

“Management did not provide measures taken regarding the defective cylinders, which were not in use and continue to lose value,” reads the audit.

“In the circumstances, the value incurred on the acquisition of the LPG cylinders valued at Sh155,845,107 could not be ascertained.”

Since its inception, the Mwananchi Gas project has suffered delays, mismanagement, and now, a near-complete halt in operations. The government’s initial plan to fund continuous rollout through proceeds from initial sales has collapsed, and no clear action has been taken to revive or repurpose the stalled initiative.

The Auditor General’s report highlighted concerns that millions of shillings in public funds may have gone to waste, with neither accountability from responsible state officials nor concrete plans to salvage the project.