Why Fuel Prices in Kenya Keep Changing
If you’ve ever wondered how fuel prices are calculated in Kenya, you’re not alone. Every month, motorists brace themselves for new prices, set like clockwork by the Energy and Petroleum Regulatory Authority (EPRA). These adjustments can be confusing and sometimes controversial—but there’s a clear formula behind the scenes. This article explains everything from landing costs to levies and forex rates, helping you understand what drives fuel costs in Kenya.
EPRA and the Fuel Price Review Cycle
The process of fuel price determination in Kenya is governed by EPRA, a state regulatory body mandated to ensure fair pricing.
- Review dates: Every 14th day of the month
- New prices effective from: 15th of every month
- Data analyzed: Fuel cargo deliveries between the 10th of the previous month and the 9th of the current month
This routine ensures that the fuel prices you pay at the pump reflect international trends, forex fluctuations, and domestic logistics.
Key Factors Behind How Fuel Prices Are Calculated in Kenya
Understanding how fuel prices are calculated in Kenya requires breaking down several interlinked components:
1. International Crude and Refined Product Prices
Kenya imports refined petroleum products. The international cost of refined fuels like petrol and diesel, usually priced in U.S. dollars, is the starting point of the pricing formula.
2. Foreign Exchange (Forex) Rate
Since fuel is purchased in USD, the KES/USD exchange rate plays a huge role. A weaker Kenyan shilling automatically raises the landed cost of fuel.
For instance, a depreciation of the shilling from KSh 150 to KSh 160 against the dollar can result in a KSh 4-5 increase per litre.
3. Freight and Insurance
Shipping costs from oil-producing countries to the port of Mombasa add to the overall expense, along with marine insurance premiums.
4. Port and Inland Handling Costs
After fuel lands in Kenya, it goes through pipeline transfers, storage, and loading for distribution. These handling and storage costs are factored into the final price.
5. Taxes and Government Levies
This is arguably the most controversial part of fuel pricing in Kenya. As of July 2025, here are some of the major levies:
| Levy | Amount (KSh/litre) |
|---|---|
| Petroleum Development Levy | 5.40 |
| Road Maintenance Levy | 18.00 |
| Excise Duty | ~21.95 (petrol) |
| VAT (16%) | Based on base price |
| Railway Development Levy | 0.50 |
| Anti-Adulteration Levy | 18.00 (diesel) |
| Import Declaration Fee | 2% of CIF value |
Taxes and levies account for over 40% of the pump price in some cases.
6. Retailer and Marketer Margins
EPRA sets fixed margins for fuel distributors and retailers to prevent overpricing. These margins are typically modest and do not fluctuate month to month.
Recent Fuel Price Changes in Kenya (July 2025)
As of the July 15–August 14 pricing period, EPRA adjusted prices upward due to rising international prices and a weakening shilling:
- Petrol: KSh 186.31/litre (+KSh 8.99)
- Diesel: KSh 171.58/litre (+KSh 8.67)
- Kerosene: KSh 156.58/litre (+KSh 9.65)
This spike came from a 6.8% increase in international product prices and a 4% weakening of the Kenyan shilling.
Why Kenya’s Fuel Prices Are Higher Than Neighbours
Many Kenyans compare pump prices with neighboring countries like Uganda or Tanzania. However, Kenya’s prices are higher due to:
- Multiple taxes and levies
- Longer logistics chains (pipeline, road, depots)
- Higher import costs due to forex volatility
- Lack of strategic oil reserves, which could buffer global shocks
According to EPRA, the tax component alone contributes over KSh 70 per litre of petrol.
Read Also: Female Cancer Deaths 2024 Kenya: Cancer Tops Causes as Pneumonia Affects Men
Solutions to High Fuel Prices
If Kenya is to stabilize or reduce fuel prices, experts suggest:
- Reducing fuel levies
- Strengthening the shilling through better forex policies
- Investing in local refining or strategic storage
- Negotiating better freight contracts and logistics efficiencies
A public conversation is also needed on whether fuel should be a source of government revenue or treated as an essential commodity.
Know What You’re Paying For
Understanding how fuel prices are calculated in Kenya helps you decode why pump prices rise or fall. While international markets and forex rates play a major role, the biggest burden often comes from domestic taxes and logistics. As the public calls for transparency and relief, knowing the breakdown empowers you to participate in informed discussions on energy policy.
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