Why your fuel bill will rise again in 2025

Kenyans should prepare for high fuel prices next year as the Energy and Petroleum Regulatory Authority (EPRA) implements the last phase of the Cost of Service for the Supply of Petroleum Products (COSSOP).

COSSOP, which was first introduced in 2018 to cushion oil marketing companies (OMCs) by introducing profit margins between the importers and the dealers (retailers) in phases, has increased the cost from Sh4 in 2018 to an all-time high of Sh17 in 2025.

This was revealed when the Senate Energy Committee chaired by Siaya Senator Oburu Odinga took Energy and Petroleum Cabinet Secretary Opiyo Wandayi to task on why the price of fuel products has been increasing steadily despite the decrease in global prices.

Senators sought to know why the cost of a litre of petrol is retailing at Sh186.31 in Nairobi while the same product costs Sh161.80 in Kigali, Rwanda — a landlocked country getting its fuel from Dar es Salaam in Tanzania.

Senate Minority Whip Ledama ole Kina accused the petroleum regulator of collecting more money and promoting OMCs to have more profits at the expense of Kenyan consumers.

“I have a problem with EPRA since in 2017, the margin for the oil marketing companies was at Sh4 which was being divided between the companies and retailers. By 2024–25, the margins are now being shared at Sh11 and Sh6 respectively,” argued Ledama.

EPRA Petroleum and Gas Director Edward Kinyua was at pains to explain why the authority has in the last five years increased the margins from Sh4 to Sh17, pushing the cost of fuel products to a staggering Sh186 per litre of petrol in Nairobi and its environs.

According to Kinyua, COSSOP was conducted in 2023, increasing the margins and at the same time the Roads Maintenance Levy was increased from Sh18 to Sh25 last year, pushing the cost of fuel further.

However, he defended the increase in margins saying that the increase could not have been implemented in one phase.

“I would like to tell Senate that you cannot implement the increase in one phase; otherwise the price of fuel would have been out of the reach for many households. We have already done the worst, the next increase will be negligible,” said Kinyua.

According to Ledama, the dollar against the shilling has constantly been stable at between Sh129–Sh131 from August last year to date, questioning why the taxes are 101 per cent of the landed cost, saying there was need to review this law.

The Narok Senator said the country cannot always be going up when global prices are going down, asking why the margins are always going up and why the ships are always taking so long to offload oil.

Nominated Senator Veronica Maina asked why Kenya’s fuel prices are the highest in the region, pointing out that a litre of petrol in Rwanda costs Sh161.80 while locally it costs Sh186.31, which raises a lot of concerns among the citizens.

Maina further asked if the Government-to-Government (G-G) arrangement of importing fuel from the United Arab Emirates (UAE) has rendered some reliefs for the Kenyan consumers, adding that regionally the cost of fuel has remained high.

“We would like to know whether the G-G has rendered some reliefs to Kenyans. Why are our prices the highest in the region? Why are the regional countries' fuel prices cheaper than Kenya while this is a regional market? What are the other countries doing that Kenya is not doing?” wondered Maina.

Wandayi said that the recent sharp increase of Sh9 per litre of petrol, diesel and kerosene was as a result of the landed costs, storage and distribution costs, gross margins and applicable taxes and levies.

The Cabinet Secretary explained that the cost is computed based on the Petroleum (Pricing) Regulations, 2022 which takes into account various components through the supply chain, and that the country has enjoyed security of supply of fuel products which he attributed to the G-to-G arrangement.

“I would like to inform Senators that our petroleum pump prices have since July been on a downward trend. We have been able to steady supply over the period, which we are even working harder to bring down,” said Wandayi.

The taxes and levies include: Excise Duty for a litre of petrol is Sh21.95; Road Maintenance Levy (RML) Sh25; Value Added Tax (VAT) Sh25.70; Petroleum Development Levy Sh5.40; and Petroleum Regulatory Levy Sh0.75.

The Importation Declaration Fee is charged at Sh1.94, Merchant Shipping Levy is charged at Sh0.03, while the Railway Development Levy is charged at Sh1.56 for a litre of petrol respectively.

Oburu said that the regulatory authority could be on a mission to recover what the oil marketers lost during the period before Cost of Service for the Supply of Petroleum Products was introduced.

“We would like the Cabinet Secretary to tell us: how did the margins between August 2024 – July 2025 increase from Sh12.30 to Sh17? Is the Energy Petroleum Regulatory Authority in a hurry to recover what they lost?” asked Oburu.

Wandayi responded that the ministry spent Sh13.6 billion in the 2024/25 financial year to cushion consumers against the relatively high cost prices of petroleum products, stating that the government stabilised petroleum pump prices throughout the financial year.

“During the financial year 2025/26, the Ministry of Energy has budgeted Sh25 billion for the purposes of stabilisation of petroleum pump prices in instances where there shall be spikes,” explained Wandayi.