How Ksh938M govt fuel stabilisation support helped reduce diesel prices

The government's Ksh938 million fuel stabilisation support played a crucial role in reducing diesel prices by Ksh5 per litre in Kenya during the latest EPRA fuel prices review. This support helped maintain fuel prices in the country from August 15, 2026, to September 14, 2026, while international petroleum prices fluctuated. In Nairobi, Super Petrol remained at Ksh214.03 per litre, while diesel prices fell from Ksh222.86 to Ksh217.86, and kerosene stayed at Ksh191.38.

The Ksh5 reduction provided relief to transport operators, businesses, and households after several months of high fuel costs. EPRA attributed the diesel price decrease to a significant drop in the cost of imported diesel, which fell by 13.08% from US$984.37 (Ksh127,692.48) to US$855.59 (Ksh111,004.25) per cubic metre between June and July 2026.

The government's intervention was necessary as the increase in petrol prices due to a 6.99% rise in imported super petrol's landed cost could have been passed on to consumers. The Ksh938 million fuel stabilisation support was used to absorb part of the petrol price increase, keeping petrol prices unchanged in Nairobi. This fuel stabilisation support is derived from the Petroleum Development Levy Fund, which the government has relied on multiple times in 2026 to cushion consumers from global oil market volatility.

The government aims to reduce sudden increases in transport costs, food prices, and business operating costs by using this stabilisation mechanism. In June 2026, President William Ruto announced Ksh21.5 billion for fuel stabilisation measures to protect households and businesses from disruptions in global oil markets. The current VAT on petroleum products stands at 8%, down from 16%, until October 2026, providing additional tax relief to consumers.

The Ksh5 diesel price reduction has a significant economic impact, as diesel fuels many aspects of the Kenyan economy, including public transport, freight trucks, agricultural machinery, generators, and industrial operations. The reduction can help lower pressure on transport and logistics costs and impact household prices depending on whether transport operators and businesses pass the savings to consumers.