Kenyan firm sells gas to low income families, replacing dirty fuels

NAIROBI (Reuters) – When dusk blankets Nairobi, small flames lick blackened cooking pots in poorer areas, as dinners simmer over charcoal fires. Charcoal is a major polluter and driver of deforestation. A new company may have part of the solution.

Kenya’s M-Gas, launched in January, is breaking into the low-income market for clean cooking fuels, using gas tanks fitted with tamper-proof smart valves that allow customers to pay for gas in small increments.

Some customers say the gas is cleaner, cheaper and more convenient than traditional fuels like wood or kerosene.

This month M-Gas received $25 million from Circle Gas, a UK-based holding company whose investors include regional telecoms giant Safaricom.

The potential market is huge – around 900 million people in Africa use dirty fuel for cooking, contributing to air pollution that causes an estimated 500,000 premature deaths on the continent each year, the World Health Organization says.

Using charcoal or wood also contributes to deforestation, a major problem for many African nations.

For many years, there was little alternative. But the recent explosion of mobile money, more affordable technology to build smart meters and urbanisation have combined to make pay-as-you-go gas competitive.

“This innovation is … reducing deforestation in cities around Africa and also improving the health of people cooking with biomass, mostly women and children,” said Sebastian Rodriguez, a Mexican engineer who invented the smart meter used by M-Gas with his Tanzanian business partner Andron Mendes.

Nairobi resident Gentrine Shazia said using M-Gas had cut her daily cooking fuel bill in half, from nearly 100 shillings to around 50 shillings.

“It doesn’t cost me as much as when I used kerosene or charcoal,” the 30-year-old mother of two said as she lit a ring on her new gas stove in a home made of corrugated iron sheets.

M-Gas installs the stove, 13-kg gas cylinder and meters – collectively worth around $80 – in customers’ homes for free.

Buying the same size tanks outright cost around $22, too expensive for many families. The smart meters on the M-Gas tanks mean customers can make small payments – even meal by meal – on their mobile phones. It also alerts the company when the gas is about to run out; a new tank is delivered free of charge.

The cost of the stove, meters and delivery is paid through a small premium on the overall price of the gas so there’s no upfront costs. It takes around two years for the cost of the equipment to be paid off, Rodriguez said.