Kenya’s latest fuel price surge has reignited a familiar but uncomfortable question: why does a country with a coastline, a major port, and established petroleum infrastructure consistently pay more for fuel than its landlocked neighbours like Uganda and Rwanda?
The recent spike — driven by global tensions, including the Iran conflict — is real. Rising landed costs and supply disruptions are undeniable. But global shocks alone cannot explain why Kenyan motorists are digging deeper into their pockets than drivers in countries that depend on Kenya’s own infrastructure to access fuel.
That disparity points to something more fundamental: a domestic pricing problem shaped by policy choices, taxation, greed and inefficiencies within the supply chain.
To begin with, Kenya’s fuel pricing structure is heavily burdened by taxes and levies. Even before global price pressures are factored in, a significant portion of what consumers pay at the pump goes to the government. Excise duty, VAT, road maintenance levy, petroleum development levy — the list is long, and the cumulative effect is severe.
Taxation is necessary. But excessive taxation on fuel is economically self-defeating. Fuel is a foundational input across the economy. When it becomes expensive, transport costs rise, food prices climb, manufacturing becomes more costly, and small businesses are squeezed. In effect, high fuel taxes become a tax on every Kenyan, regardless of income level.
The April 2026 price jump — the steepest in recent memory — only magnified this burden. Even with the government’s attempt to soften the blow through a VAT reduction to 8 per cent, the relief was partial and temporary. More importantly, it did not address the structural issue: Kenya’s fuel pricing model is designed in a way that makes high prices almost inevitable.
But taxation is only one side of the equation.
The other is market structure and margins. Kenya’s fuel supply chain — from importation under the Government-to-Government (G-to-G) framework to storage, distribution and retail — is riddled with opacity. The G-to-G deal was sold as a solution that would stabilise supply and eliminate middlemen. In reality, it appears to have prioritised supply continuity over affordability.
Indeed, the framework has never been a price-reduction mechanism. And recent developments — including controversial imports, quality concerns, and allegations of manipulation within the supply chain — have exposed its limitations. When procurement lacks transparency, and when private players dominate critical stages of the chain, consumers inevitably pay the price.
The comparison with regional markets makes this even more troubling.
Uganda and Rwanda, despite higher logistical costs, have often managed to maintain more competitive pump prices. This should not be possible. Kenya, as the entry point for much of the region’s fuel, should logically have the lowest prices. The fact that it does not is a clear indication that inefficiencies and excess costs are being embedded within the system.
There is also a competitiveness dimension that cannot be ignored.
Kenya positions itself as East Africa’s economic hub. Yet high fuel costs undermine that ambition. Businesses face higher operational costs. Transporters pass on increased expenses. Investors factor in energy costs when making decisions. Over time, Kenya risks pricing itself out of regional competitiveness.
The burden ultimately falls on ordinary citizens. The matatu commuter pays more. The farmer pays more to transport produce. The small business owner faces shrinking margins. Salaried workers see their disposable income eroded. High fuel prices are not an abstract policy issue — they are a daily economic reality.
So what needs to change?
First, Kenya must rationalise its fuel taxes. This does not mean eliminating them entirely, but reassessing their cumulative impact. In times of global shocks, there should be automatic stabilisers — temporary tax reductions that cushion consumers rather than amplify the crisis.
Second, the pricing formula must be made fully transparent. Kenyans deserve to understand how pump prices are arrived at, and whether margins across the supply chain are justified. Trust cannot exist without clarity.
Third, the G-to-G framework must be reviewed. If it is primarily a supply stability tool, then it must be complemented by mechanisms that ensure affordability. Otherwise, it risks becoming a system that guarantees supply but at an unsustainable cost to consumers.
Fourth, Kenya must think regionally. In an integrated East African market, fuel pricing cannot be detached from what neighbouring countries are doing. Persistent price disparities will encourage economic leakage, distort trade flows, and weaken Kenya’s position as a regional hub.
Finally, there must be accountability. Allegations of manipulation, inflated imports, and opaque deals must be thoroughly investigated and addressed. Without cleaning up governance within the sector, no pricing reform will be effective.
The reality is simple: Kenyans should not be paying more for fuel than their neighbours, especially when those neighbours rely on Kenya’s infrastructure.
Global factors may set the baseline, but domestic policy determines the final price. And right now, that policy is failing the Kenyan consumer.
The fuel crisis of 2026 should be a turning point. If it is not, then high prices will remain the norm — and Kenyans will continue to pay the cost of a system that does not work in their favour.
Elijah Mwangi is a scholar based in Nairobi; he comments on local and global matters.