Kenya Retains Lower Fuel VAT, Allocates Sh945 Million to Keep Pump Prices Stable

The government has moved to shield consumers from higher fuel costs. It has extended the 8 percent VAT on petroleum products and allocated Sh945 million to keep pump prices unchanged during the current pricing cycle.

The reduced VAT rate will remain in force until October 14, while Sh945 million from the Petroleum Development Levy will be used during the July and August 2026 pricing cycle to cushion petrol, diesel and kerosene prices.

Energy and Petroleum Cabinet Secretary Opiyo Wandayi said the decision followed consultations with the National Treasury and is intended to prevent an increase in fuel prices despite fluctuations in the global oil market.

The government said the intervention is aimed at protecting households and businesses from rising energy costs, easing pressure on the cost of living and ensuring a steady supply of petroleum products across the country.

Motorists, transport operators and manufacturers are expected to benefit from the measures, which are designed to cushion consumers against higher fuel prices in the coming months while maintaining stability in the local energy market.