NAIROBI, Kenya, Apr 15 — The latest fuel price adjustment, which pushed petrol to Sh206 per litre and diesel to Sh206.84, has exposed a complex layering of global costs, domestic taxes and targeted subsidies that together determine what motorists pay at the pump.
Even after a Sh6.2 billion stabilisation subsidy and a VAT cut from 16 per cent to 13 per cent, Energy and Petroleum Regulatory Authority (EPRA) data shows that structural costs — not just global oil prices — continue to dominate Kenya’s fuel pricing system.
What makes up the price of a litre of fuel?
PETROL (Sh206.97 per litre)
Imported fuel (landed cost): Sh107.23 (51.8pc)
Distribution, storage & margins: Sh22.32 (10.8pc)
Taxes & levies: Sh82.09 (39.7pc)
Subsidy relief: -Sh4.68
Nearly 4 in every 10 shillings goes to taxes, even after VAT reduction.
DIESEL (Sh206.84 per litre)
Imported fuel (landed cost): Sh133.89 (64.7pc)
Distribution & margins: Sh21.97 (10.6pc)
Taxes & levies: Sh74.90 (36.2pc)
Subsidy relief: -Sh23.92
Diesel absorbed the sharpest global cost shock but received meaningful cushioning. Without subsidy, diesel would cost Sh230.76 per litre
KEROSENE (Sh152.78 per litre)
Imported fuel (landed cost): Sh170.86 (111.8pc)
Distribution & margins: Sh21.99
Taxes & levies: Sh68.03
Subsidy relief: -Sh108.10
Government intervention is so large that it fully offsets import costs. Without subsidy, kerosene would cost Sh260.88 per litre
Who is being protected?
EPRA’s stabilisation structure shows a clear hierarchy:
Kerosene: highest protection (social households)
Diesel: moderate cushioning (transport & economy)
Petrol: minimal relief (private motorists)
The government’s policy signal points to protecting households and the productive economy, not discretionary consumption.
The tax reality behind every litre
Despite VAT cuts, fuel remains heavily taxed:
Petrol: Sh82.09 per litre
Diesel: Sh74.90 per litre
Kerosene: Sh68.03 per litre
Major components:
VAT (Petrol): Sh24.35
Road maintenance levy: Sh25
Excise duty: Sh21.95
Even after VAT cut, taxes still account for 36–45 per cent of pump prices.
Why prices moved differently
Petrol: high taxes + minimal subsidy → sharp rise
Diesel: high import shock + moderate subsidy → contained spike
Kerosene: extreme subsidy → price stability despite global surge
The bottom line
Fuel prices are no longer driven by global oil costs alone. EPRA data shows a system where taxes remain structurally dominant, subsidies are highly targeted, and global shocks are only partially transmitted to consumers.