Economic analysts have called on the Energy and Petroleum Regulatory Authority (EPRA) to reduce fuel prices in its 14th monthly review, scheduled for June 14, 2025.
Led by Johnson Kireru, the observers say the appeal, grounded in global and local economic trends, aims to alleviate Kenya’s cost-of-living crisis and boost key sectors like tourism.
He points to a global oversupply of fuel, driven by increased production from OPEC+ and non-OPEC countries, which has pushed Brent Crude Oil prices to around Kshs7,750 per barrel in May 2025, down from Kshs8,520 in April.
“Global demand, particularly in Asia, has declined due to reduced industrial activity, softening prices and creating opportunities for reductions,” Kireru highlighted, noting the impact on market dynamics and pricing strategies.
Locally, Kireru argued that lower fuel costs would stimulate consumption by reducing production and transportation expenses, easing the burden of high commodity prices, such as maize, which surged 45 per cent to KShs4,800 per bag in March 2025.
He strongly urged leveraging the potential to strengthen Kenya’s important tourism sector by enhancing affordability, thereby attracting more visitors and boosting economic growth through increased travel accessibility and competitive pricing strategies.
EPRA’s latest review, covering May 15 to June 14, 2025, kept Nairobi prices steady at KSh 174.63 for super petrol, KSh 164.86 for diesel, and KSh 148.99 for kerosene, despite significant drops in landed costs: 2.95% for petrol, 6.62% for diesel, and 4.52% for kerosene.
EPRA attributed this stability to subsidies from the Petroleum Development Levy (PDL), a mechanism criticized for its reliance on public funds and lack of transparency. Taxes and levies, including a 16% VAT and a KSh 25 Road Maintenance Levy, account for a substantial portion of pump prices, limiting the impact of global price declines.
The Central Bank of Kenya projects 5.1–5.5% GDP growth in 2025, driven by agriculture and tourism, but high fuel prices continue to fuel inflation and raise the cost of living.
The Kenyan shilling’s stability, trading at KSh 158.66 against the US dollar in February 2024, offers an opportunity to pass on global price reductions.
However, EPRA’s cross-subsidization policy, where petrol prices offset diesel subsidies, and increased marketer margins (raised to KSh 7 per litre in May 2025) may constrain cuts.
Kenyans argue that fuel should retail at KSh 120 per litre given current global prices, criticizing the authority for prioritizing oil marketers over consumers. Geopolitical risks and fiscal pressures, including a strained PDL fund, further complicate the prospect of significant reductions.
Kireru urged EPRA to reflect the full 2.95–6.62% drop in landed costs, potentially lowering prices by KSh 2–5 per litre, and to reduce reliance on subsidies. He also called for greater transparency in pricing and coordination with stakeholders to support sector growth.