Increase in fuel prices explained despite Government-to-Government agreement, according to Wandayi
In a surprising turn of events, Kenya's fuel prices remain higher than those of its East African neighbours, despite a government-to-government (G-to-G) arrangement designed to lower landing costs. The arrangement, which has been in place for several years, has successfully reduced freight and premium rates compared to countries like Tanzania. However, the savings made from this agreement are offset by heavy domestic taxation and multiple levies, according to recent reports.
One of the key factors contributing to the price disparity is the high taxation on fuel products in Kenya. The Energy and Petroleum Regulatory Authority (EPRA) has highlighted the Roads Maintenance Levy, which amounts to Ksh 25 per litre of petrol and diesel, as a significant contributor to the pump price increase.
The landed cost of fuel versus the retail price is another critical factor. While the EPRA attributes recent price increases to rising global oil prices and shipping costs, these factors are compounded in Kenya by taxes that are higher than those of neighbouring countries.
The Kenyan government has previously intervened to subsidise fuel prices to cushion consumers, but it has recently chosen not to do so amidst global price hikes. This decision has led to an increase in fuel prices, with the average landed cost of super petrol increasing by 6.45 per cent from $590.24 per cubic metre in May to $628.30 per cubic metre in June 2025.
Energy Cabinet Secretary Opiyo Wandayi has admitted that fuel prices in Kenya are higher than in other East African countries. He has defended the prices, stating that the G-to-G arrangement has lowered the landing cost. However, the CS's explanation about the rising fuel prices has been met with criticism from members of the National Assembly, who have questioned his assertions.
The high fuel prices have sparked concern among politicians and the public alike. Members of the National Assembly have criticised the blaming of parliament alone for high prices, emphasising the impact on citizens living near borders who might cross into neighbouring countries to buy cheaper fuel. Turkana Woman Rep Cecilia Asinyen and Nyatike MP Tom Odege have expressed their concerns about the situation.
In summary, while the G-to-G petroleum product supply arrangement lowers Kenya’s landed cost, the country’s relatively high fuel prices are largely a result of substantial domestic taxes and levies that push pump prices above those of neighbours. The Kenyan government is under pressure to address this issue and find a solution that will benefit consumers and stabilise fuel prices in the country.
- The high taxes and multiple levies on fuel products in Kenya make its fuel prices more expensive compared to its East African neighbors, despite the government-to-government (G-to-G) arrangement designed to lower landing costs.
- One of the key contributors to the pump price increase in Kenya is the Roads Maintenance Levy, which amounts to Ksh 25 per litre of petrol and diesel.
- The Kenyan government's decision not to intervene and subsidize fuel prices amidst global price hikes has led to an increase in the retail price of fuel.
- Members of the National Assembly have questioned the Energy Cabinet Secretary's assertions on the rising fuel prices, citing the impact on citizens living near borders who might cross into neighboring countries to buy cheaper fuel.
