Kenya’s October fuel price hike: Why petrol, diesel and kerosene have all risen

The Energy and Petroleum Regulatory Authority announced the latest price review on October 14, with the new rates taking effect from October 15.

In Nairobi, super petrol increased by KSh12.93 per litre, diesel by KSh9.90, and kerosene by Sh28.49.

The new maximum retail prices are Sh226.96, Sh227.76 and Sh219.87 per litre respectively.

Mombasa’s prices are lower because fuel costs include transport and distribution charges that vary by location.

EPRA set super petrol at Sh223.81, diesel at Sh224.61 and kerosene at Sh216.71 per litre in the coastal city.

The prices are ceilings: service stations may not sell the regulated products above the applicable maximum, although they may charge less within the rules.

Import costs rose sharply

EPRA attributed the increase primarily to the higher cost of the fuel Kenya imported in September.

The average landed cost of super petrol rose by 11.81 per cent, from US$874.26 to US$977.55 per cubic metre.

Diesel’s average landed cost increased by 11.32 per cent, from US$957.05 to US$1,065.38 per cubic metre, while kerosene rose by 9.41 per cent to US$1,098.31 per cubic metre.

These figures refer to refined petroleum products and the cost of bringing them into Kenya.

They are not the same as crude-oil prices quoted on international markets.

EPRA’s Director-General Edward Mwirigi Kinyua said the market had faced exceptional pressure in September as conflict in the Middle East heightened concerns about supply.

The Central Bank of Kenya’s October 9 bulletin also reported a rise in Murban crude to US$101.67 per barrel on October 8 from US$95.76 on October 1.

Geopolitical tensions can affect freight, insurance, shipping routes and the prices charged by fuel suppliers, adding costs before the products arrive in Mombasa.

How the pricing formula works

Kenya regulates the maximum retail prices of super petrol, diesel and kerosene under the Energy (Petroleum Pricing) Regulations, 2022.

EPRA first calculates the weighted average landed cost of imported products discharged during the monthly pricing window.

It then adds approved wholesale costs, including jetty handling, storage, transport, inventory financing, wholesale margins and taxes.

The retail formula adds the cost of moving fuel from secondary depots to service stations, approved retail investment and operating margins, and VAT.

That is why the final pump price is not determined by crude-oil prices alone.

Refined-product costs, freight, the exchange rate, transport, storage and taxation all influence the amount motorists pay.

Why the G-to-G arrangement cannot freeze prices

Kenya’s government-to-government fuel-import deal was introduced in 2023 to secure petroleum supplies and ease pressure on the shilling through 180-day credit terms.

The arrangement gives participating suppliers and Kenyan marketers more time to settle payments and reduces the need for all the foreign exchange to be sourced immediately after a cargo arrives.

It does not lock fuel prices at a fixed rate or remove exposure to global market changes.

EPRA still calculates the maximum pump price using the weighted average cost of imported fuel and the other approved pricing components.

When the supplier’s landed cost rises sharply, the regulated price can rise too.

The deal’s credit terms and the price formula therefore address related but different issues:

One changes the timing of payments and foreign-exchange demand; the other determines the maximum retail price after the relevant costs are included.

The wider effect

Petrol affects private motorists and public transport, while diesel is particularly important for freight, commercial vehicles, agriculture and industry.

Kerosene remains relevant to households that use it for cooking or lighting.

Higher diesel costs can feed into transport and distribution expenses, potentially placing pressure on prices for food and other goods.

The size and timing of those effects depend on how businesses absorb costs and how long elevated fuel prices persist.

For households already managing tight budgets, the kerosene increase is particularly steep in absolute per-litre terms.

The latest review leaves consumers facing a higher bill at the pump just as transport and heating-related costs are under pressure.

The fuel-price cycle runs until November 14, after which EPRA will issue another review based on the costs and pricing period applicable at that time.