Motorists miss bigger cut in fuel costs despite drop in pump prices

The Energy and Petroleum Regulatory Authority (Epra) has denied users of super petrol a bigger reduction in retail prices, holding back the full benefit of the falling cost of petroleum products.

It instead used the savings to subsidise pump prices for diesel and kerosene. In reducing the pump prices by between Sh1 and Sh2 on Wednesday, Epra applied a Sh1.59 price stabilisation surplus on a litre of petrol, but also a stabilisation deficit of Sh2.57 per litre of diesel and Sh1.61 per litre of kerosene.

In doing so, the regulator denied motorists a bigger reduction in prices of super petrol while at the same time artificially lowering their pump prices for diesel and kerosene. 

Following the reduction, the cost of a litre of super petrol will retail at Sh182.52 in Nairobi, diesel at Sh170.47 and kerosene at Sh153.78.

It is the first time that the retail cost of petroleum products has changed since September 2025, with Epra having retained the prices unchanged over the four months.

The reduction has, however, failed to mirror the drops in the cost of petroleum products in the international market.  Despite applying a subsidy or stabilisation deficit on both kerosene and diesel, Epra data shows that the landed cost of the two products dropped by bigger margins compared to super petrol.

Import costs for diesel dropped by 4.20 per cent, while kerosene recorded a dramatic drop in landed cost at 8.92 per cent. The landed-cost for petrol dropped by a modest 0.1 per cent in December compared to November, even as it cross-subsidised the other products.

“The average landed cost of imported super petrol decreased by 0.1 per cent from $592.84 (Sh77,069) per cubic metre in November to $592.24 (Sh76,990) per cubic metre in December; diesel decreased by 4.20 per cent from $654.24 (Sh85,051) per cubic metre to $626.75 (Sh81,476) while kerosene decreased by 8.92 per cent from $667.05 (Sh86,716) to $607.55 (Sh78,981) per cubic metre over the same period,” said Epra. 

The drop in local pump prices and landed cost falls short of the much sharper drop in the cost of petroleum products in the international market, with both diesel registering a drop of at least nine per cent in the second half of 2025.

The cost of super petrol reduced 10.5 per cent to $651.87 (Sh84,743) per tonne) in December, from $728.64 (Sh94,723) in September, according to data that Epra has been using to compute local pump prices.

International market

Diesel also dropped by 9.2 per cent to $583.55 (Sh75,861) per tonne in December from $642.91 (Sh83,578) in September.  This is in comparison to local pump prices, whereby prices stayed put over the period and only dropped this month and even then by Sh2 for a litre of petrol and Sh1 for a litre of diesel. 

The failure of local pump prices to follow the trend of the cost of petroleum products in the international market could be explained by recent increases in costs to the government and the oil industry players last year. 

In July and March last year, Epra increased margins for oil marketing companies by a combined Sh5 per litre across the three petroleum products.

This saw oil marketing companies’ (OMCs) margins increase to Sh17.39 per litre of super petrol from Sh12.39 that was in place early last year. Margins for diesel went up to Sh17.31 per litre from Sh12.36, while margins for Kerosene went up to Sh17.24 per litre from Sh12.36 earlier.

The increment followed Epra’s implementation of the recommendations of the Cost of Service Study in the Supply of Petroleum Products (Cossop) that recommended increasing margins for oil sector players. 

The study recommended an increase in the OMC margins by at least Sh7 per litre of petrol, which Epra adopted but said it would implement in phases.

The final phase will see margins increase to over Sh19 per litre for each of the three products.

Additionally, there has been an increase in taxes and levies in recent years, with the most recent being the hike of the Road Maintenance Levy by Sh7 per litre to Sh25 per litre of super petrol and diesel from Sh18 in July 2024, as well as the 200 per cent increase of the Epra levy to 75 cents from Sh25 cents in February 2024.