PREVIEW
Another fuel increase exposes the gap between the president’s promise of a $16 billion refinery and the immediate cost of keeping households moving
Petrol prices in Kenya have increased by around 20% since the start of the United States/Israeli war against Iran in March and disruption to trade flows via the Strait of Hormuz. The Energy and Petroleum Regulatory Authority announced a further 6% rise from 15 October.
President William Samoei Ruto’s government has promised to cap increases. In mid-April, a fuel price rise was limited to 6% after the government slashed VAT on fuel from 16% to 8%, a measure which will be kept in place until 14 January. Maintaining that tax subsidy, despite significant budgetary pressures on the Treasury, shows political importance of fuel prices. Ministers also introduced a temporary waiver on the sulphur limits on diesel and petrol imports (Dispatches 4/5/26, Ruto’s fuel waiver exposes the politics in the supply crunch).
Nigerians and South Africans are facing similar fuel price hikes but their governments have provided more buffers than Kenya. Of all the continent’s economies, fuel prices loom largest in Kenya’s politics.
The new price of petrol KSh226.96 (US$1.7) a litre, up 6.04%, will hit middle-class motorists but the government has kept the diesel price to 4.55%. But it imposed the sharpest hike on kerosene, up 14.89%, which is used for cooking fuel by tens of thousands of families across the country. Even before these increases, inflation in September was at its highest rate in three years.
The political fallout of higher prices also raises the stakes on the planned $16 billion Lamu oil refinery project to be built by Nigerian magnate Aliko Dangote. Ruto and Dangote broke ground on the site on 30 September but much work remains to be done before construction can start (Dispatches 5/10/26, Dangote breaks ground on $16bn Kenyan refinery as legal challenges linger). The project faces a legal challenge of environmental grounds and above all, the complex financing arrangements have to be finalised.
Ruto argues the refinery project is vital to reducing Kenya’s reliance on fuel imports. He also wants the newly created sovereign wealth fund to take a major stake. As a non-oil producer, Kenya relies on the Middle East for most of its fuel. It imports around 100,000-120,000 barrels a day of refined petroleum (AC Vol 67 No 9, Ruto stakes his presidency on a $39bn investment blitz).
Copyright © Africa Confidential 2026
https://www.africa-confidential.com
Prepared for Free Article on 19/10/2026 at 00:02. Authorized users may download, save, and print articles for their own use, but may not further disseminate these articles in their electronic form without express written permission from Africa Confidential / Asempa Limited. Contact subscriptions@africa-confidential.com.
