(NAIROBI, KENYA) – Kenya has withdrawn its fuel subsidy for the first time since August 2025, pushing pump prices to their highest level in years.
The Energy and Petroleum Regulatory Authority announced the decision on Wednesday evening.
Petrol and diesel prices rose by KES 12.93 and KES 9.90 per litre respectively.
A litre of diesel will now retail at KES 227.85 ($1.76 / £1.34) in Nairobi, up from KES 217.86 ($1.68 / £1.28).
Petrol is up to KES 226.96 ($1.75 / £1.33) in Nairobi from KES 214.03 ($1.65 / £1.26).
Kerosene rose by KES 28.49 to KES 219.87 ($1.70 / £1.29).
The State extended a reduction in Value Added Tax on petroleum products for another three months to mid-December.
The spike in pump prices reflects the impact of the renewed Middle East war that disrupted global energy markets.
Prices of refined fuel reached their highest level in over a decade last month.
The subsidy withdrawal follows the depletion of the Petroleum Development Levy Fund, which the State has used to ease costly petroleum.
The levy is funded by consumers who pay KES 5.40 per litre of diesel and petrol and KES 0.40 for every litre of kerosene.
Its heavy use in the wake of the war in Iran, which broke in February, exhausted the kitty.
The State applied a record high subsidy of KES 34.07 per litre of diesel to prevent prices from rising in the monthly cycle to 14th July this year.
“The decision we have taken today is meant to ensure that we save enough money for the future,” said Edward Kinyua, Director General of the Energy and Petroleum Regulatory Authority.
“Europe is going into winter and this will trigger a surge in demand for diesel and kerosene, and thus lead to a sharp rise in global prices of the two products.”
He said the PDL kitty is under the National Treasury and the decision followed its advice.
Fuel prices have a big effect on inflation, which relies heavily on diesel for transport, power generation and agriculture. Kerosene is used in many households for cooking and lighting.
Costly fuel will spark fresh inflationary pressure given that farmers, goods producers and service providers factor fuel costs into the pricing of their goods and services.
Inflation hit 6.8% last month, the highest since the 6.9% recorded in January 2024.
Kenya in April cut VAT on petroleum products from 16% to 8% for three months after crude oil prices surged because of the war.
It has extended the lower VAT for the second time to cushion households and businesses from volatility in global energy prices.
Landed costs of refined fuel hit record highs in over a decade last month, setting the stage for steep pump prices locally.
The surge in prices of refined fuel reflects the impact of the renewed Middle East conflict that has seen global prices of Brent crude surge past the $100 per barrel mark since last month.
Brent crude stood at $105.98 (KES 13,750.90) on Wednesday.
The US military destroyed multiple Iranian tankers last month following ballistic missile attacks by Iran’s Islamic Revolutionary Guard Corps against US Navy warships as the conflict escalated.
Iran had directed attacks at US allies in the Gulf region, targeting critical infrastructure such as oil refineries and pipelines. This has disrupted supplies and led to steep prices of refined fuel in global markets.
The latest rise in local prices will be significantly felt in the coming days as service providers, farmers and manufacturers pass the increased cost of fuel to consumers.
Diesel is the main fuel powering the Kenyan economy and is used to power farm machinery, industries and public transport.
Discover more from Access Radio®
Subscribe to get the latest posts sent to your email.
