Safaricom-backed cooking gas distributor M-Gas is engaging the government as it seeks a licence to sell carbon credits from its clean-cooking operations in Kenya.
The company, owned by UK-based Circle Gas, has already received a Letter of Approval from the government, a key requirement before projects can be allowed to trade carbon credits internationally.
Safaricom acquired 18.96 percent stake in Circle Gas in 2019 for Sh384.6 million. Both the telco’s current CEO, Peter Ndegwa, and Michael Joseph, its former chief executive, sit on Circle Gas’s board. The Kenyan government owns 35 percent of Safaricom.
“The project is now progressing toward the next stage of the authorisation process,” M-Gas confirmed in a recent LinkedIn post.
“The project demonstrates the strength of its design and our close engagement with the relevant authorities, and it supports continued discussions with potential offtakers and financing partners.”
Details on the project’s financiers and expected carbon credit trade operations have not yet been disclosed. M-Gas did not respond to Business Daily’s queries.
The Safaricom-backed company sells liquefied petroleum gas (LPG) under a ‘pay-as-you-cook’ model, targeting low-income households.
Customers buy cooking gas from as little as Sh10 using M-Pesa. They are provided with a gas cylinder and a two-burner cooker at no upfront cost, eliminating the initial expense of buying equipment and refilling a standard 13-kilogramme cylinder, which can cost more than Sh6,000.
M-Gas’s cylinders are fitted with smart meters that track gas usage and automatically disconnect the supply once the paid-for amount is consumed. When gas runs low, the system alerts the firm, which delivers a refilled cylinder to the customer’s home at no extra charge.
The service runs on Safaricom’s Narrowband Internet of Things network. Oil marketing giant TotalEnergies provides both the LPG and the cylinders.
M-Gas’s approval process comes amid heightened scrutiny of carbon credit projects in Kenya following the collapse of clean-cooking startup Koko Networks.
A week after M-Gas announced it had received an approval letter for its planned project, Koko, on January 30, said it was folding.
The firm failed to secure letters of authorisation from the government, despite Kenya signing an investment framework agreement in June 2024 that would have allowed Koko to sell carbon credits.
The startup, co-founded by Greg Murray, Sagun Saxena and Nicholas Stokes, sold heavily subsidised bioethanol stoves and fuel to over 1.5 million low-income Kenyan households and relied on carbon credit sales to recoup losses.
But the government argues that approving Koko’s request would have allowed a single company to exhaust Kenya’s share of carbon credits available in global compliance markets. Trade Cabinet Secretary Lee Kinyanjui said the business model “did not align” with Kenya’s broader interests and would have locked out other eligible sectors such as agriculture and manufacturing.
“It was not possible to allow everything they wanted to claim because it would mop up everything that Kenya would otherwise do,” Mr Kinyanjui said last week, citing insights from the meetings he participated in. “What would we tell the 10 or 20 other companies that are also eligible for the same, including those in agriculture and manufacturing that would also want to claim?”
An official at the Ministry of Environment, which approves carbon projects, could not comment on the carbon authorisation process or the status of M-Gas’s approval. “We are currently unable to comment on those issues,” she said by phone. Emails to the Environment Principal Secretary’s office were not responded to.
CS Kinyanjui said, “Our interest was limited to addressing perceptions that (Koko’) closure reflected the business environment.”
Kenya’s Climate Change (Carbon Markets) Regulations, 2024, spell out the eligibility of projects that benefit, including being subject to “verification of each project result by an independent auditor” and “adhering to national priorities, ecological, social, cultural and economic safeguards.”
Koko had invested about $300 million (Sh38 billion) in Kenya, its largest African market. Last March, the World Bank’s political risk insurer, Multilateral Investment Guarantee Agency (Miga), insured Koko’s investment for $179.6mn (Sh23.1 billion), in what was the world’s first carbon-linked political insurance coverage.
With the closure, Koko has been placed under administration and is expected to file an insurance claim that could expose Kenya to a Sh23.1 billion compensation bill over the government’s breach of Koko’s contract.
