KAM Raises Alarm Over Record Fuel Prices

The Kenya Association of Manufacturers has raised concern over the sharp rise in fuel prices announced by the Energy and Petroleum Regulatory Authority, warning that the increase will significantly raise the cost of production, transportation, and living across the country.

In the latest fuel review released on May 14, 2026, EPRA set the price of Super Petrol at KSh214.25, Diesel at KSh242.92, and Kerosene at KSh152.78, the highest fuel prices ever recorded in Kenya. According to KAM, fuel prices have increased by an average of KSh80 between March and May this year.

KAM noted that although the Government’s decision in April to reduce VAT on petroleum products from 16 per cent to eight per cent offered temporary relief, the latest price hikes continue to place immense pressure on businesses and households.

“Fuel prices have a far-reaching impact across the economy. They directly influence the cost of transportation, food production, agriculture, manufacturing, and the movement of goods and services nationwide, ultimately affecting the cost of living and the competitiveness of businesses,” the association said in a statement.

The manufacturers’ body explained that fuel remains a critical input in industrial operations, from sourcing raw materials to production and distribution of finished goods.

“Kenyan manufacturers rely heavily on Automotive Gas Oil (AGO), Industrial Diesel Oil (IDO), and Heavy Fuel Oil (HFO) in their operations. Access to affordable, reliable, and quality fuel is therefore essential to sustaining industrial productivity and competitiveness,” KAM stated.

The association further revealed that taxes and levies account for nearly 46 per cent of retail fuel prices, including Excise Duty, VAT, the Road Maintenance Levy, Petroleum Development Levy, Railway Development Levy, and the Anti-Adulteration Levy.

“This significant tax burden continues to exert considerable pressure on manufacturers and Kenyan households, particularly amid a challenging economic environment marked by high taxation, rising operational costs, and increased cost-of-living pressures,” the statement added.

KAM warned that the increase in fuel prices is expected to trigger higher commodity prices as manufacturers grapple with rising production and distribution costs.

“Transportation of raw materials and finished products remains heavily dependent on diesel-powered vehicles, while some manufacturers use petroleum products directly as raw materials. Consequently, the rise in fuel prices will significantly increase both production and distribution costs across multiple sectors,” the association said.

Manufacturers of products such as resins and shoe polish, which depend on kerosene in their production processes, are among industries expected to face increased operational costs.

KAM also cautioned that the fuel cost component in electricity tariffs could rise from the current KSh3.47 per kilowatt hour, further increasing the burden on businesses and consumers.

The association noted that the impact of the fuel hike is already being felt in the transport and logistics sector, where operators have raised fares nationwide amid protests and work stoppages that recently disrupted movement and economic activities.

“For manufacturers, these disruptions result in interrupted operations, delayed production schedules, supply chain inefficiencies, and reduced productivity, ultimately affecting overall economic performance,” KAM said.

The lobby has now called on the Government to urgently review fuel-related taxes and levies to ease pressure on businesses and consumers.

“We therefore call on the Government to urgently intervene and implement measures aimed at reducing the cost of fuel to cushion households, support businesses, and safeguard economic stability,” KAM stated.

The association added that reducing the tax burden on fuel would help lower commodity prices, stabilize supply chains, and support economic recovery, while also calling for targeted fiscal interventions to inject liquidity into the economy.

“KAM remains committed to working with the Government and other stakeholders in identifying sustainable solutions to the challenges currently facing businesses, consumers, and the economy at large,” the association said.