Inside govt’s subsidy gamble behind the looming fuel adulteration crisis
By Aloys Michael, May 18, 2026Kenya could be headed for a fresh fuel adulteration crisis as the government’s aggressive subsidy on kerosene creates a sharp price gap with diesel, reviving fears that rogue dealers may once again mix the cheaper fuel with transport fuels for massive profits.
The widening difference of more than Ksh90 per litre between kerosene and diesel has now alarmed industry players, who warn that the market conditions are creating strong incentives for illegal fuel blending.
The controversy is also reigniting debate over the government’s fuel subsidy strategy, with critics arguing that authorities should have spread the subsidy across all petroleum products instead of heavily cushioning kerosene alone.
Industry stakeholders say the current model risks reversing years of reforms that had largely contained adulteration through higher taxes, fuel marking programmes, and tighter monitoring by regulators.
The concerns come at a time when the sector is already grappling with fears over high sulphur fuel recently allowed into the market, which experts warn could damage engines and increase maintenance costs for motorists and businesses.
Petroleum Outlets Association of Kenya (Poak) chairman Martin Chomba warned that the sharp difference between diesel and kerosene prices could tempt unscrupulous traders to increase diesel volumes using paraffin.
Over the last two fuel pricing cycles, kerosene has received one of the heaviest subsidies. During the current cycle, the subsidy stands at Ksh91 per litre, compared to Ksh89 in the April-May cycle.
In the previous pricing review, the government lowered VAT on fuel to eight per cent and injected a Ksh6 billion subsidy. In the current cycle, the State has maintained a similar approach with a Ksh5 billion cushion aimed at stabilising prices.
“The danger that is looming in the petroleum trade is in the disparity between the price of petrol and diesel in comparison to that of kerosene.
“Kerosene has in the past been used for adulteration. And when you give a price of Ksh152 per litre against a price of a diesel Ksh243 per litre, what we are likely to start seeing now is the return of adulteration,” Chomba said.
“If not checked, we could see a resurgence now that there is a serious incentive because of the price disparity, which would take us back from where we have come from as a country.”
Substandard fuel concerns
Kenya has in the past struggled with widespread fuel adulteration, particularly in rural towns and along major highways, where some dealers mixed kerosene with diesel to maximise profits.
At one point, industry estimates suggested that nearly 70 per cent of some independent petrol stations were selling sub-standard fuel blended with kerosene.
The government later introduced anti-adulteration measures, including the anti-adulteration levy of Ksh18 per litre imposed on kerosene in 2018. Excise duty on kerosene was also gradually increased from Ksh7.21 to Ksh11.37 per litre, matching diesel taxes to reduce the incentive for illegal blending.
The Energy and Petroleum Regulatory Authority (EPRA) also introduced fuel marking systems that detect adulterated products through colour changes whenever kerosene is mixed with diesel or petrol.
However, industry players now fear those gains could be undermined by the current subsidy structure.
Chomba argued that the government should have redistributed the kerosene subsidy across petrol, diesel, and kerosene, which could have lowered prices for all three regulated fuels to below Ksh200 per litre.
He maintained that subsidising diesel would have had a wider economic impact because the fuel powers key sectors such as transport, agriculture, manufacturing, and logistics.
“It makes a lot of sense in subsidising diesel more than you would subsidise kerosene. The guise that kerosene is used by the common person used to work a while back. But today, even if you look at the numbers in terms of how much kerosene is used in the country, the consumption has been going down as people adopt other cooking fuels,” he said.
“The numbers tell you that more people are using cooking gas than they are using kerosene. It will not hurt to increase the price of kerosene slightly and reduce the price of diesel because you will essentially be subsidising the cost of production and what would have otherwise cost the common person more in terms of buying products in the shop.”
Data from the Kenya National Bureau of Statistics (KNBS) shows kerosene consumption has been steadily declining over the years as households shift to cleaner cooking alternatives such as liquefied petroleum gas (LPG).
Kerosene usage dropped to 44,100 metric tonnes in 2025 from a peak of 448,000 tonnes recorded in 2017.
However, there was a slight increase from 36,700 tonnes in 2024, suggesting that some households may have reverted to paraffin due to tough economic conditions.
Meanwhile, LPG consumption has nearly tripled over the last decade, rising to 475,900 tonnes last year from 151,700 tonnes in 2016.
Transport sector players are also questioning the government’s subsidy priorities.
“I would like to ask the government if they have forgotten that diesel drives this economy,” said Rig Owners Association chairman Cornelius Chepsoi.
Chepsoi questioned why paraffin had “suddenly” become cheaper than all other fuels.
“How is it possible that paraffin has become the cheapest fuel in the country? Who uses paraffin?” he asked during a press briefing on Monday, May 18, 2026.
“We are not at war as Kenya. Other countries are buying fuel from other sources. Just for the record, we are buying fuel supposedly from countries that are aligned with the Strait of Hormuz, Saudi Arabia and the United Arab Emirates. Just the other day, we were told there was fuel that did not meet the specification. Where do you think that fuel came from?”
Industry leaders now warn that unless the subsidy imbalance is reviewed, Kenya risks sliding back into a costly era of fuel adulteration that could hurt consumers, damage engines, and weaken confidence in the petroleum sector.