KAM Statement on the Increase in the Cost of Fuel

Kenya Association of Manufacturers (KAM) expresses deep concern over the sharp increase in fuel prices announced by the Energy and Petroleum Regulatory Authority (EPRA) on 14th May 2026.

Fuel prices now stand at KSh 214.25 for Super Petrol, KSh 242.92 for Diesel, and KSh 152.78 for Kerosene, the highest ever, in Kenya’s history. Between March and May, the cost of fuel has increased by an average of KSh 80.

While the Kenya Association of Manufacturers appreciates the Government’s interim decision in April 2026 to reduce VAT on petroleum products from 16% to 8% as a measure to ease the cost burden on consumers and businesses, fuel prices have a far-reaching impact across the economy. They directly influence the cost of transportation, food production, agriculture, manufacturing, and the movement of goods and services nationwide, ultimately affecting the cost of living and the competitiveness of businesses.

For the manufacturing sector, fuel is a critical input throughout the value chain from sourcing of raw materials to production and the distribution of finished goods. Kenyan manufacturers rely heavily on Automotive Gas Oil (AGO), Industrial Diesel Oil (IDO), and Heavy Fuel Oil (HFO) in their operations. Access to affordable, reliable, and quality fuel is therefore essential to sustaining industrial productivity and competitiveness.

Currently, taxes and levies, including Excise Duty, VAT, the Road Maintenance Levy, Petroleum Development Levy, Railway Development Levy, and the Anti-Adulteration Levy, account for approximately 46 percent of retail fuel prices. This significant tax burden continues to exert considerable pressure on manufacturers and Kenyan households, particularly amid a challenging economic environment marked by high taxation, rising operational costs, and increased cost-of-living pressures.

The country is facing challenging economic times driven by the continuously rising cost of fuel and declining purchasing power. Transportation of raw materials and finished products remains heavily dependent on diesel-powered vehicles, while some manufacturers use petroleum products directly as raw materials. For instance, manufacturers of resins and shoe polish rely on kerosene in their production processes. Consequently, the rise in fuel prices will significantly increase both production and distribution costs across multiple sectors. This implies that the price of consumer goods can be expected to rise. The fuel cost component in electricity tariffs is also projected to increase from the current KES 3.47 per kWh, compounding the cost burden on businesses and households.

The impact is already being felt across the transport and logistics sector, where operators have recently increased fares nationwide and are expected to implement further increases in response to rising fuel costs. This has made daily commuting increasingly unaffordable for many Kenyans, particularly employees who depend on public transport to access their livelihoods.

The nationwide protests and work stoppages by public transport operators, which left many citizens stranded and unable to report to work, further underscore the severity of the situation. For manufacturers, these disruptions result in interrupted operations, delayed production schedules, supply chain inefficiencies, and reduced productivity, ultimately affecting overall economic performance.

We therefore call on Government to urgently intervene and implement measures aimed at reducing the cost of fuel to cushion households, support businesses, and safeguard economic stability.

The Government should consider reviewing various fuel-related taxes and levies to ease pressure on the economy and protect the competitiveness and productivity of local manufacturers. Such measures would play a critical role in lowering the cost of commodities, stabilizing supply chains, and supporting broader economic recovery. Equally important is the need to inject liquidity into the economy through targeted fiscal interventions.

KAM remains committed to working with the Government and other stakeholders in identifying sustainable solutions to the challenges currently facing businesses, consumers, and the economy at large.