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Kenya raises fuel prices sharply despite tax cut
Kenya has increased diesel and petrol prices to historic levels, with diesel surging by 40 shillings per litre, as global oil market disruptions drive costs higher. The Energy and Petroleum Regulatory Authority (Epra) announced the new rates on Wednesday, setting diesel at 206 shillings ($1.6; £1.2) per litre and petrol at a similar price, effective immediately until 14 May.
Global conflict fuels price surge
Epra attributed the price hike to rising global oil prices and elevated shipping costs, despite the Kenyan government reducing the value-added tax (VAT) on fuel from 16% to 13%. The regulator clarified that the disputed fuel consignment imported last month-allegedly substandard and overpriced-was excluded from the pricing calculation.
Shortages and controversy overshadow market
Fuel shortages have been reported in parts of Kenya, though the government insists supplies are adequate and accuses some fuel companies of hoarding. The shortages coincide with public outrage over the allegedly substandard fuel shipment, which was reportedly blended with government-stored stocks before entering the market. The government canceled the consignment, citing quality and cost concerns, and barred marketers from selling it. The scandal has led to arrests and resignations of senior energy officials, with investigations ongoing.
Regional impact of global energy crisis
The price increases reflect broader disruptions caused by the US-Israel conflict with Iran, which began on 28 February. The war has stalled shipments through the Strait of Hormuz, a critical route for global oil and gas supplies. While a conditional two-week ceasefire, including the reopening of the strait, was agreed last Wednesday, concerns persist that the energy crisis may worsen.
African nations respond with tax cuts and rationing
Countries across Africa are implementing measures to mitigate the crisis. Kenya's VAT reduction on fuel is set to last until July, while South Africa introduced a one-month cut in the fuel levy two weeks ago. Zambia, Namibia, and Ghana have announced similar tax reductions. South Sudan has resorted to electricity rationing, and Ethiopia is prioritizing fuel distribution to essential sectors.
Outlook and next steps
Epra will conduct its next fuel price review on 14 May. Meanwhile, the Kenyan government continues to monitor the disputed fuel consignment, with investigations into the scandal ongoing. The public remains wary of further price fluctuations as global oil markets remain volatile.
