Why Kenyans should prepare for high fuel prices next year
By Rawlings Otieno, August 4, 2025Kenyans should brace themselves for high fuel prices next year in July, as the Energy Petroleum Regulatory Authority (EPRA) moves to implement the last phase of the Cost of Service for the Supply of Petroleum Products (COSSOP).
First introduced in 2018, COSSOP was to cushion Oil Marketing Companies (OMCs) by introducing profit margins between the Importers and the dealers (retailers) in phases, a move that has increased the cost from Ksh4 in 2018 to an all-time high of Ksh17 in 2025.
The expected increase emerged after the Senate Energy Committee, chaired by Siaya lawmaker Dr Oburu Odinga, put to task Energy and Petroleum Cabinet Secretary Opiyo Wandayi on why the price of fuel products has been increasing steadily despite the decrease in the global prices for the product.
This even as it emerged that regionally, the cost of a litre of petrol in Kenya is Ksh186.31 retailing in Nairobi, while the same product costs Ksh161.80 in Kigali, Rwanda- a landlocked country getting its fuel from Dar es Salaam in Tanzania.
Senate Minority Whip Ledama Olekina (Narok) accused the petroleum regulator of collecting more money and promoting OMCs to have more profits at the expense of the Kenyan consumers.
“I see a problem with EPRA. In 2017, the margins for the OMCs was at Ksh4, which was being split between the OMCs and the retailers. By 2024-25, the margins are now being split between Ksh11 and Ksh6, respectively,” he charged.
Ledama went on: “EPRA is increasing the margins of OMCs. You cannot say that OMCs have increased operational costs. Please consider the life of Kenyans.”
EPRA’s Petroleum and Gas Director Edward Kinyua was at pains to explain why the authority has, in the last five years, increased the margins from a paltry Ksh4 to Ksh17, pushing the cost of fuel products to a staggering Ksh186 per litre of petrol in Nairobi and its environs.
According to him, COSSOP was conducted in 2023, which gave rise to the increase in the margins and at the same time, the Roads Maintenance Levy was increased from Ksh18 to Ksh25 last year, pushing the cost of fuel further.
However, EPRA defended the increase in margins, saying that the increase could not have been implemented in one phase.
“You cannot implement the increase in one phase, otherwise the price of fuel would have been out of the reach for many households. We have already done the worst. The next increase will be negligible,” said Kinyua.
According to Ledama, the dollar against shilling has constantly been stable at between Ksh129 and Ksh131 from August last year to date, questioning why the taxes on the landed costs are 101 per cent.
“We need to review this law. That taxes are 101 per cent of the landed costs. We cannot always be going up when global prices are going down. Why are the margins going up? Why are the ships taking so long to offload?” he posed.
While weighing in on the increase of the margins, Veronica Maina (nominated) questioned why regionally, Kenya’s fuel prices are the highest, pointing out that a litre of petrol in Rwanda costs Ksh161.80 while locally it costs Ksh186.31.
She further questioned if the Government-to-Government (G-G) arrangement of importing fuel from the United Arab Emirates (UAE) has rendered some relief for the consumers, adding that regionally, the cost of fuel has remained high.
“Has the G-G rendered some relief to Kenyans. Why is our price the highest in the region? Why are the regional countries’ fuel prices cheaper than in Kenya? This is a regional market. What is it that the countries in the region are doing that Kenya is not doing?” posed Maina.
However, Wandayi responded, saying that the recent sharp increase of Ksh9 per litre of petrol, diesel and kerosine was a result of the landed costs, storage and distribution costs, gross margins and applicable taxes and levies.
He further explained that the cost is computed based on the Petroleum (Pricing) Regulations, 2022, which takes into account various components through the supply chain.
“Kenya has enjoyed the security of supply of fuel products, which he attributed to the G to G arrangement. Our petroleum pump prices have been on a downward trend since July. We have been able to steadily supply over the period,” said Wandayi.
The taxes and levies include Excise Duty for a litre of petrol is Ksh21.95, Road Maintenance Levy (RML), Ksh25, Value Added Tax (VAT), Ksh25.70, Petroleum Development Levy, Ksh5.40 and Petroleum Regulatory Levy, Ksh0.75.
The Importation Declaration Fee is charged at Ksh1.94, the Merchant Shipping Levy is charged at Ksh0.03, while the Railway Development Levy is charged at Ksh1.56 for a litre of petrol, respectively.
Oburu underpinned that the regulatory authority could be on a mission to recover what the Oil Marketers lost during the period before COSSOP was introduced.
“How did the margins between August 2024 -July 2025 increase from Ksh12.30 to Ksh17? You are now in a hurry to recover what they lost?” he posed.
In his response, Wandayi disclosed that the ministry spent Ksh13.6 billion in the 2024/25 financial year to cushion consumers against the relatively high prices of petroleum products.
“You may wish to note that during the financial year 2024-25, the government stabilised petroleum pump prices throughout the financial year. We applied the Petroleum Development Levy (PDL) to stabilise those prices. The law gives Epra discretion to apply PDL. When prices have not spiked, we don’t apply the levy,” he explained. ‘