KENYAN MANUFACTURERS SOUND ALARM OVER RECORD HIGH FUEL PRICES

The Kenya Association of Manufacturers (KAM) has raised concern over the sharp increase in fuel prices announced by the Energy and Petroleum Regulatory Authority (EPRA), warning that the rising costs could significantly impact manufacturing, transportation, agriculture, and the overall cost of living in Kenya.

In a statement released on May 18, 2026, KAM noted that fuel prices have reached the highest levels in Kenya’s history, with Super Petrol retailing at KSh 214.25, Diesel at KSh 242.92, and Kerosene at KSh 152.78. The association revealed that fuel prices have increased by an average of KSh 80 between March and May 2026.

KAM acknowledged the Government’s interim decision in April 2026 to reduce VAT on petroleum products from 16 percent to 8 percent but emphasized that the continued increase in fuel prices is already exerting pressure across multiple sectors of the economy. According to the association, fuel costs directly affect transportation, food production, agriculture, manufacturing, and the movement of goods and services nationwide.

The association explained that fuel remains a critical input in the manufacturing value chain, from sourcing raw materials to production and distribution of finished products. Kenyan manufacturers heavily rely on Automotive Gas Oil (AGO), Industrial Diesel Oil (IDO), and Heavy Fuel Oil (HFO) to sustain operations and maintain productivity.

KAM further highlighted that taxes and levies account for approximately 46 percent of retail fuel prices. These include Excise Duty, VAT, the Road Maintenance Levy, Petroleum Development Levy, Railway Development Levy, and the Anti-Adulteration Levy. The association warned that the tax burden continues to place pressure on manufacturers and households amid rising operational costs and declining purchasing power.

According to KAM, the increase in fuel prices is expected to drive up production and distribution costs across various industries. Manufacturers that use petroleum products such as kerosene in production processes, including producers of resins and shoe polish, are likely to be heavily affected.

The association also warned that the fuel cost component in electricity tariffs could rise beyond the current KES 3.47 per kWh, further increasing the financial burden on businesses and consumers.

KAM observed that the impact of rising fuel prices is already being felt in the transport and logistics sector, where operators have increased fares nationwide and are expected to implement additional hikes. The association noted that this has made daily commuting increasingly unaffordable for many Kenyans who rely on public transport.

The statement also referenced recent nationwide protests and work stoppages by public transport operators, which disrupted operations and left many citizens stranded. KAM said such disruptions negatively affect manufacturers through delayed production schedules, supply chain inefficiencies, and reduced productivity.

KAM has since called on the Government to urgently review fuel-related taxes and levies in order to ease economic pressure, stabilize supply chains, reduce the cost of commodities, and support broader economic recovery. The association reaffirmed its commitment to working with Government and stakeholders to identify sustainable solutions for businesses, consumers, and the economy.

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