Brace for more pain at the pump as KPC eyes higher tariff
Business
By
Macharia Kamau
| Oct 08, 2025
Kenya Pipeline Company (KPC) petroleum storage facilities in Nairobi on August 21, 2024.[FILE/Standard]
The Kenya Pipeline Company (KPC) has applied for an increase in its tariff, which, if approved, will result in a further rise in the share of taxes and levies charged to motorists at the pump.
The Energy and Petroleum Regulatory Authority (Epra) said yesterday it had received the proposal to increase KPC’s pipeline transportation and storage tariff by 2.4 per cent to Sh5.57 per cubic metre per kilometre from the current rate of Sh5.44.
The proposal is currently being subjected to public participation. It comes after a series of increases in different components of pump prices.
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This year alone, Epra has increased the margins for oil marketing companies by Sh5 per litre. It was preceded by the Sh7 hike in the Road Maintenance Levy mid-last year and the doubling of Value Added Tax on fuel in 2023.
Epra has been seeking public views since Monday (October 6) in a process that will run until October 17 in major towns across the country.
“Epra has received an application by KPC for the review of the pipeline transportation and secondary storage tariff for 2025-26 to 2027-28 financial years,” said Epra in a public notice.
During one of the public forums in Nakuru, Epra Director General Daniel Kiptoo said KPC is seeking additional funds to support upcoming capital-intensive projects such as the Mombasa-Nairobi pipeline capacity enhancement, construction of new storage tanks in Western Kenya, modernisation of data control systems and the replacement of ageing infrastructure.
This is even as he insisted that in reviewing the KPC proposal, Epra would balance “cost recovery for critical infrastructure investments and operational sustainability, while ensuring that petroleum products remain affordable and reliable for consumers.”
If approved, the higher pipeline tariff will increase how much Kenyans pay in taxes and levies whenever they fuel, which has been cited as one of the biggest contributors to the high cost of fuel in the country.
At Sh82.04 per litre of super petrol, taxes and levies account for 44.5 per cent of the pump price of Sh184.52 in Nairobi.
The planned tariff hike is also against recent increases in taxes and levies, but also the margins for oil marketing companies and fuel petroleum transporters, all coming at a time when Kenyans are grappling with tough economic times.
Last year, the government increased taxes and levies by nearly Sh12 per litre of fuel, according to an analysis by the Institute of Economic Affairs (IEA).
This was through the hiking of the Road Maintenance Levy by Sh7 to Sh25 per litre of super petrol and diesel, as well as the 200 per cent increase of the Epra levy to 75 cents from Sh25 cents.
Epra also increased the margins for oil marketers by Sh5 this year, which has seen the wholesale and retail margins increase to Sh17.39 per litre of super petrol currently from Sh12.39 early this year.
Earlier, the Finance Act, 2023, in June of that year, doubled VAT to the standard rate of 16 per cent.
The Institute of Economic Affairs observed a trend where fuel prices are reviewed piecemeal, which ends up becoming significant over time.
“Over the past two years, Kenya’s fuel pricing structure has undergone a series of notable shifts, with each one quietly adding weight to the final pump price. These incremental adjustments are shaping a new normal in Kenya’s fuel pricing and deserve a closer look,” said IEA in a recent analysis of the fuel pricing regime in Kenya.
“All else being equal, the price of a litre of petroleum product has risen by a fixed amount of approximately Sh12 per litre over the past two years.”