Oil & Gas

Kenya currently imports fuel at lower costs than Tanzania, thanks to a Government-to-Government (G-to-G) arrangement with Gulf suppliers. In July 2025, Kenya paid less per metric tonne for diesel, petrol, and jet fuel than Tanzania did, while also enjoying a longer 180-day credit window compared to Tanzania’s 60-day terms.

Despite this advantage, Kenyan pump prices remain higher, with Minority Leader Opiyo Wandayi blaming the country’s heavy tax structure. Out of the Sh186.31 pump price for petrol in Nairobi, Sh82.33 (45%) is attributed to various taxes and levies, including VAT, Road Maintenance Levy, and Excise Duty. Diesel and kerosene are also heavily taxed, with kerosene bearing an additional Anti-Adulteration Levy.

Wandayi argued that Kenya's fuel tax model is the "real problem" and not inefficiencies in fuel procurement or distribution. He emphasized that the current system of ad valorem taxes — which rise as global prices increase — is unsustainable and keeps fuel expensive for ordinary Kenyans, even when import costs are favorable.

His remarks were met with resistance from fellow MPs, who rejected claims that Parliament was to blame. Lawmakers like Tom Odege and Cecilia Asinyen denied having any role in setting pump prices, with many calling for a review of the taxation model instead. As fuel prices across the border remain lower, pressure is mounting for Kenya to act on domestic tax reforms.