NAIROBI, Kenya — Energy and Petroleum Cabinet Secretary Opiyo Wandayi has defended Kenya’s fuel pricing model, warning that steep reductions in pump prices could destabilise the petroleum sector and trigger disruptions in the country’s fuel supply chain.
Speaking on Monday, Wandayi said fuel prices are determined through a structured regulatory framework and not through arbitrary government decisions. He cautioned that efforts to lower prices beyond economically sustainable levels could threaten the viability of oil marketing companies and undermine national energy security.
“If we are not careful and we make it uneconomical for the oil marketing companies to remain in business, we risk disrupting the entire supply chain and causing serious havoc in the economy,” Wandayi said.
His remarks come amid public concern over persistently high fuel prices despite government interventions aimed at cushioning consumers from global market volatility.
The Cabinet Secretary explained that the Energy and Petroleum Regulatory Authority (EPRA) relies on periodic Cost of Service Studies to establish the actual cost of importing, storing, transporting, and distributing petroleum products. The findings inform the margins granted to oil marketing companies and help determine retail fuel prices.
According to Wandayi, the current pricing structure reflects the outcome of the most recent review and seeks to balance the interests of consumers, industry players, and the broader economy.
He noted that the actual market cost of diesel would be significantly higher without government intervention. According to the ministry, the underlying cost of diesel is estimated at about Sh259 per litre before the application of subsidies, tax adjustments, and stabilisation measures.
Wandayi said a combination of fiscal interventions, including adjustments to Value Added Tax (VAT), changes to fuel-related levies and the use of the Fuel Price Stabilisation Fund, has helped moderate prices at the pump.
The government is currently using the Petroleum Development Levy Fund to cushion consumers against rising global fuel costs. Under the latest EPRA review, effective June 15, Super Petrol retails at Sh214.03 per litre in Nairobi, Diesel at Sh222.86, and Kerosene at Sh191.38.
The CS warned that global oil markets remain unpredictable, particularly due to geopolitical tensions in the Middle East, which continue to influence international benchmark prices.
“A large portion is the international benchmark price, which is the component affected most by the situation in the Middle East and could skyrocket in the coming months, and the deductions will be wiped out,” he said.
Wandayi also dismissed calls for what he termed unsustainable short-term price interventions, arguing that government policy must strike a balance between protecting consumers, maintaining tax revenues and ensuring fuel suppliers remain operational.
His comments highlight the difficult policy choices facing the government as it seeks to contain the cost of living while safeguarding the stability of a sector critical to transport, manufacturing, agriculture and electricity generation.
