The government has announced a Ksh945 million fuel subsidy and extended the reduced 8 per cent VAT on petroleum products for another three months in a move aimed at shielding Kenyans from possible fuel price increases.
Energy and Petroleum Cabinet Secretary Opiyo Wandayi said the VAT relief will remain in place until October 2026, allowing households and businesses to continue benefiting from lower taxation as global oil prices remain unpredictable.
Speaking on Tuesday, July 14, Wandayi said the government would also use funds from the Petroleum Development Levy to support fuel prices during the July-August pricing cycle.
“As part of the government's commitment to cushioning households and businesses from international oil market volatility, we have extended the 8 per cent VAT on petroleum products for a further three months until October 2026,” Wandayi said.
He added that Ksh945 million from the levy would be deployed to help maintain current pump prices.
The announcement came ahead of the Energy and Petroleum Regulatory Authority (EPRA)’s latest fuel price review, which will determine the prices of petrol, diesel and kerosene for the July-August cycle.
Wandayi also assured Kenyans that the country has adequate fuel reserves despite ongoing global energy market uncertainties and disruptions affecting shipping routes in the Middle East.
He said the Government-to-Government (G2G) fuel import arrangement has helped Kenya secure supplies from alternative sources while keeping fuel costs relatively stable through fixed freight and premium charges.
“I therefore wish to reassure motorists and all consumers that there is adequate fuel across the country and that the government remains steadfast in ensuring that this situation continues for the long haul,” he stated.
The intervention comes as Nairobi pump prices currently stand at Ksh214.03 per litre for super petrol, Ksh202.86 for diesel and Ksh191.38 for kerosene.
While the subsidy and VAT extension are expected to cushion consumers, the final impact on pump prices will depend on EPRA’s latest review, which could still result in either an increase or reduction in fuel prices.