Kenya Extends 8% VAT on Fuel Until October 2026, Allocates Sh945 Million to Keep Pump Prices Stable
The Kenyan government has extended the application of the reduced 8 per cent Value Added Tax (VAT) on petroleum products for another three months and committed Sh945 million from the Petroleum Development Levy (PDL) to keep pump prices stable despite mounting pressure from global oil markets.
The measures, announced on Tuesday by Energy and Petroleum Cabinet Secretary Opiyo Wandayi, are aimed at shielding households, businesses and transport operators from rising energy costs linked to escalating geopolitical tensions in the Middle East.
Under the latest intervention, the reduced 8 per cent VAT on petroleum products will remain in force until October 14, 2026. The extension is expected to ease the financial burden on consumers at a time when international crude oil prices continue to climb.
The government will also inject Sh945 million from the Petroleum Development Levy during the July–August 2026 fuel pricing cycle to cushion consumers and maintain current pump prices.
According to Wandayi, the measures form part of broader efforts to protect the economy from external shocks while ensuring fuel remains as affordable as possible under prevailing global market conditions.
“The Government remains committed to cushioning households and businesses from international market volatility,” the CS said.
The announcement comes as renewed military tensions in the Middle East have disrupted commercial shipping through the Strait of Hormuz, one of the world’s busiest oil transit routes. Attacks on commercial vessels and reduced oil tanker traffic have contributed to higher international oil prices, raising concerns over fuel costs worldwide.
Despite the growing uncertainty, Wandayi assured Kenyans that the country’s petroleum supply remains secure.
He said Kenya has sufficient national fuel stocks supported by a resilient import and distribution network, alongside the Government-to-Government (G2G) fuel supply arrangement.
The Cabinet Secretary explained that the G2G framework has enabled Kenya to maintain fixed freight and insurance costs even as global shipping charges continue to rise. This has helped stabilize the cost of imported fuel while ensuring uninterrupted deliveries across the country.
He added that the arrangement also allows suppliers to source petroleum cargoes from alternative loading regions outside the Gulf without transferring additional costs to Kenyan consumers.
Although Wandayi acknowledged that future fuel prices could still be influenced by rising international benchmark oil prices, he said the Ministry of Energy and Petroleum will continue working closely with industry stakeholders to safeguard fuel supplies and preserve the benefits offered by the G2G agreement.
The Cabinet Secretary further noted that government investments aimed at strengthening Kenya’s petroleum sector have improved the country’s resilience to global market disruptions. He said motorists, manufacturers, farmers, investors and businesses can remain confident that fuel will continue to be readily available despite ongoing volatility in international energy markets.
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