The use of charcoal for cooking has significantly decreased in Mogadishu. Liquefied petroleum gas (LPG) has predominantly replaced charcoal for cooking. Several energy companies have established themselves as suppliers of gas cylinders, delivering them directly to customers’ homes…
Not long ago, the prices of gas cylinders of various sizes were very high until a price war began among energy companies. At one point, a 13kg gas cylinder was sold for $32 or more. Gas shortages in the country resulted in frequent price hikes, Somgas, a leading company owned by the Hormuud conglomerate, began sending messages to customers about price reductions.
Hormuud’s telecommunications network gives Somgas a competitive edge over rival companies. This network advantage did not last long. Other companies, such as Gasco, Sahal Gas Company, Aman Gas and Hass, have found ways to match Somgas’s price reductions. The price war greatly benefits consumers.
Somgas had to change its marketing strategy by discontinuing price reduction messages after realising that its competitors had developed ways to avoid being vulnerable to Somgas’s pricing tactics. Somgas now occasionally surprises customers with price reductions upon delivery of gas cylinders.
Gas cartels are less likely to emerge in Mogadishu. Hormuud might acquire struggling gas companies or offer merger opportunities to reduce price wars. If such a merger and acquisition strategy comes to pass, consumers will be denied both choice and affordability in gas supplies used for cooking in Mogadishu and other parts of the country.
