Kenya’s scandal of unexplained rising prices at the fuel pump
By Victor Mukabi and Cynthia Atuo, July 17, 2025Kenya’s recent fuel price hike—pushing pump costs above those in neighbouring countries like Uganda, Tanzania, and Rwanda—has triggered a storm of public and political backlash, with critics accusing the government of overtaxing fuel and using levies as backdoor borrowing tools.
In the latest review, the Energy and Petroleum Regulatory Authority (EPRA) raised prices of Super petrol, diesel, and kerosene in Nairobi by Ksh8.99, Ksh8.67, and Ksh9.65 per litre, respectively.
That puts Super petrol at Ksh186.31 per litre in the capital, compared to Ksh141 in Tanzania, Ksh171 in Uganda, and Ksh153 in Rwanda. Diesel now retails at Ksh171.58 locally, above Uganda’s Ksh164 and Rwanda’s Ksh155.50.
The sharp surge in prices, EPRA claims, is due to global oil price trends—but that explanation is being challenged by some legislators and economists who are instead fingering higher taxes and levies.
Kiharu MP and former chair of the National Assembly’s Budget Committee, Ndindi Nyoro, has dismissed the rationale, pointing out that global oil prices peaked in mid-2023 and have since stabilised.
According to him, the real problem lies in punitive taxation and opaque fiscal manoeuvres.
“Out of what Kenyans pay at the pump, over Sh80 per litre on petrol and Sh76 on diesel go straight into taxes and levies,” said Nyoro.
“The only effective tool we have to stabilise prices is by adjusting taxes, and that’s where this government is failing.”
Nyoro also revealed that the government had secretly introduced a Ksh7 per litre levy last year—right when global prices were declining—and has securitised this revenue stream to borrow Ksh175 billion, without parliamentary approval.
The loan, he claims, doesn’t appear in official public debt records.
Secret levy
“That makes it an illegal debt. We’re now spending money collected in advance from Kenyans, locking out future governments from making fiscal decisions,” he warned, adding that there has been too much secrecy and even officials at the National Treasury can’t explain where this money is coming from or who the lenders are.
The legislator further raised alarm over the potential erosion of Kenya’s fiscal sovereignty.
“If we start using public levies as collateral for hidden loans, what’s to stop future governments from securitising VAT, PAYE, or NHIF? What will be left?” he posed.
His sentiments are echoed by Bernard Njiri, Senior Analyst at the Institute of Public Finance, who said the hikes are driven not by market forces of demand and supply but by revenue desperation.
“The global oil market is relatively stable. This is a domestic tax manoeuvre in disguise,” said Njiri.
“It’s a move to fill the budget deficit without introducing new taxes. But it will hurt every sector because fuel is a primary input in the economy.”
He advised the government to address its expenditure side, which is one of the key contributors to poor fiscal planning.
“The best way the government could do this is by cutting unnecessary expenditure to reduce this budget instead of burdening Kenyans with fuel prices,” he advised.
Njiri warned that reduced consumer spending due to high pump prices will suppress demand, derail economic recovery, and threaten GDP projections made in the 2025/26 budget.
“The responsible move would’ve been to cut unnecessary government expenditure—not punish Kenyans with higher fuel prices,” he said.
Meanwhile, watchdogs like Transparency International and Flywheel Advisory say the lack of transparency surrounding the securitised fuel levy raises further red flags about illicit financial flows.
Advance borrowing
They argue that opaque State behaviour in managing public funds is a key enabler of such financial misconduct, and Kenya’s current fuel pricing and securitisation saga fits the bill.
At the same time, Nyoro questioned how much the government has borrowed, from whom, at what interest, and the implications this has for future budgets, warning that the State is now spending money collected in advance for the next several years, locking out future administrations from making budgetary decisions.
“There has been a lot of secrecy around the securitisation of funds. We have asked these questions in Parliament, and even people at the National Treasury do not seem to know. Even the Ksh175 billion is from different sources other than the official sources,” he revealed.
Skewed practices
“If we continue using public levies as collateral for loans without parliamentary oversight, what will stop future lenders from securitising our VAT, PAYE, or NHIF? What will be left of Kenya’s financial sovereignty?” he asked.
The aspect of secrecy on matters of public interest, such as this, serves as a red flag for Illicit Financial Flows (IFFs) according to stakeholders such as Transparency International and Flywheel Advisory.
According to the organisations, governments are key enablers of IFFs due to a lack of transparency and the skewed practices, which are issues that the country is currently facing around the levies and securitisation is no different.
“Such information is crucial for public interest, and if concealed from them, no rationale behind them and a lack of transparency are linked to IFFs,” Grace Mburu, a forensics and anti-financial crimes specialist at Flywheel Advisory, said during an IFF engagement with financial reporters on July 9, 2025.