The Kenya Association of Manufacturers (KAM) has expressed deep concern following the sharp increase in fuel prices announced by the Energy and Petroleum Regulatory Authority (EPRA).
According to a statement issued by KAM Chief Executive Tobias Alando, the new prices represent the highest fuel costs in Kenya’s history, placing immense pressure on an already challenging economic environment marked by high taxation and declining consumer purchasing power.
The latest price review has pushed retail fuel costs to unprecedented levels across the country:
- Super Petrol: Ksh 214.25
- Diesel: Ksh. 242.92
- Kerosene: Ksh. 152.78
KAM noted that between March and May 2026 alone, the cost of fuel skyrocketed by an average of Ksh. 80. While the association expressed appreciation for the government’s interim decision to reduce VAT on petroleum products from 16% to 8%, it warned that the current price levels remain entirely unsustainable for businesses and citizens alike.
The 46% tax burden
A primary driver of the high costs at the pump is the heavy taxation embedded in local fuel pricing. Currently, various taxes and levies account for approximately 46 percent of retail fuel prices. These include:
- Excise Duty and Value Added Tax (VAT)
- Road Maintenance Levy
- Petroleum Development Levy
- Railway Development Levy
- Anti-Adulteration Levy
KAM emphasized that this significant tax burden continues to exert severe operational and financial pressure on manufacturers and ordinary Kenyan households.
Fuel serves as a critical input throughout the industrial value chain, impacting everything from the sourcing of raw materials to the production and distribution of finished goods.
Kenyan manufacturers rely heavily on Automotive Gas Oil (AGO), Industrial Diesel Oil (IDO), and Heavy Fuel Oil (HFO) for daily operations. Furthermore, some industries use petroleum products directly as raw materials; for instance, manufacturers of resins and shoe polish depend directly on kerosene for their production processes.
With this latest spike, KAM projects a severe domino effect across the economy:
- Rising Production and Distribution Costs: Increased transport and raw material expenses will inevitably push up the retail price of essential consumer goods.
- Higher Electricity Bills: The fuel cost component in electricity tariffs is projected to increase from the current Ksh. 3.47 per kWh, compounding the cost burden on factories and households.
The impact of the fuel hike is already causing visible strain across the transport and logistics sectors. Transport operators have implemented nationwide fare hikes, making daily commuting increasingly unaffordable for workers.
The crisis recently boiled over into nationwide protests and work stoppages by public transport operators, leaving many citizens stranded and unable to report to work. For manufacturers, these transport disruptions have resulted in interrupted plant operations, delayed production schedules, supply chain inefficiencies, and sharply reduced overall productivity.
To safeguard economic stability and protect local industrial competitiveness, KAM is urgently calling on the government to step in with targeted fiscal remedies.