Over the past two months, the national government has not used the fuel subsidy funds to cushion Kenyans from high fuel prices. It has now been revealed that this is because the government has depleted the funds.
According to Energy and Petroleum Cabinet Secretary Opiyo Wandayi, the government did not have any funds with which it could have cushioned Kenyans in the July 14 price review that saw a fuel increase across the country.
“For the pricing cycle of July 15 to August 14, 2025, the projected amount required for stabilization was Sh2.5 billion. The pump pricing cycle coincided with the start of the Financial Year 2025/2026, a time at which the ministry did not have the requisite funds in their books to commit to payment of the stabilization,” CS Wandayi said.
In the July Energy and Petroleum Regulatory Authority (EPRA) increase, a litre of petrol went up by Sh8.99 and will now sell at Sh186.31 in Nairobi and its environs. A litre of diesel went up by Sh8.67 and will now retail at Sh171.58 in Nairobi while a litre of kerosene went up by the largest margin of Sh9.65 to retail at Sh156.58 over the next 30 days.
These increases were the highest on record since September 2023 when a litre of diesel shot up by Sh21.32 to sell at Sh200.99 and a litre of petrol went up by Sh16.96 to Sh211.64.
Kerosene is mainly used by low-income households in the country for cooking and lighting and the upward price movement is expected to have a direct impact on affordability. At the same time, with diesel a major economic fuel for the transportation sector, factories and industries, the increase nearly Sh9 per litre has exposed consumers to higher costs of goods and services, including matatu fares.
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However, a look at how the government has used funds collected from the petroleum development levy indicates that the levy has oftentimes been redirected to other expenses. For instance, in the financial year to June 2025, the government collected Sh26.37 billion from the petroleum development levy. However, only Sh13.68 billion of this was used on the fuel subsidy.
The government has been charging motorists Sh5.40 per litre for the fuel subsidy which it has been terming as ‘stabilization’. Although the charge was introduced by the previous government of former President Uhuru Kenyatta, the current government under President William Ruto has continued the charge, but does not openly admit to subsidizing fuel prices.
