Kenya’s petrol and diesel prices are determined through a regulated monthly pricing formula administered by the Energy and Petroleum Regulatory Authority (EPRA). The pump price is not simply the international price of crude oil plus a petrol station’s profit. EPRA’s formula incorporates the landed cost of imported petroleum products, port handling, storage, transportation, financing, wholesale and retail margins, government taxes and VAT. EPRA publishes the maximum retail prices for regulated petroleum products on the 15th of each month.
The biggest underlying influence is usually the cost of the imported fuel itself. Kenya largely imports refined petroleum products, so changes in international product prices, shipping costs and the exchange rate can eventually feed into the Kenyan pump price. But taxes, logistics and regulated margins also matter. A useful way to understand a litre of petrol or diesel is therefore to follow it from the foreign refinery to Mombasa, through Kenya’s storage and pipeline system, and finally to the filling station.
Kenya does not set fuel prices from crude oil alone
The most common misconception is that Kenyan petrol prices simply follow the global price of crude oil.
The relationship is more complicated.
Kenya generally imports refined petroleum products, meaning the petrol and diesel have already been produced before the cargo reaches Mombasa.
Consequently, the relevant international price is principally the cost of the imported refined product rather than simply the headline price of a barrel of crude.
Crude prices still matter because crude is the fundamental feedstock for most refined petroleum products. But refinery margins, product-specific supply and demand, freight costs and geopolitical conditions can cause refined-product prices to move differently from crude.
That distinction became particularly visible during the Middle East energy disruption in 2026, when EPRA reported that the cost of imported petroleum products had risen sharply.
The basic Kenyan fuel-price formula
EPRA’s regulated pricing system can be simplified into two stages.
First, the regulator calculates a maximum wholesale price.
Then it adds the costs and margins associated with getting the product from a secondary depot to the retail station and calculates the maximum retail price.
In simplified form:
**Landed fuel cost
- port and storage costs
- transportation
- financing
- wholesale margin
- taxes
- VAT
- retail transport and margins
= maximum retail pump price**
The actual regulatory formula is more detailed than this simplified representation.
| Component | What it represents | Why it affects the pump price |
|---|---|---|
| Landed cost | Cost of imported petroleum product, including international cargo costs | Usually the largest underlying component |
| Port handling | Discharge and jetty-related costs at Mombasa | Adds the cost of bringing the cargo ashore |
| Storage | Primary and secondary storage | Pays for holding fuel before distribution |
| Transportation | Pipeline, road and related movement costs | Moves fuel from coastal terminals to markets |
| Inventory financing | Cost of financing fuel stocks | Reflects capital tied up in petroleum inventories |
| Wholesale margin | Regulated wholesale allowance | Compensates wholesale operations |
| Taxes and levies | Government charges other than VAT | Directly increases the consumer price |
| Retail costs and margins | Transport from depot plus retail investment and operating margins | Covers the final distribution stage |
| VAT | Value Added Tax | Applied within the regulated pricing calculation |
1. The landed cost is the starting point
The landed cost represents what the imported petroleum product costs once it enters Kenya’s supply system.
EPRA calculates this using the weighted average cost of relevant imported petroleum cargoes discharged at Mombasa during the applicable pricing period. The current methodology considers cargoes discharged between the 10th day of the previous month and the 9th day of the pricing month.
This means international petroleum prices have a direct route into Kenya’s monthly pricing mechanism.
If imported diesel becomes substantially more expensive, the landed cost rises.
If imported petrol becomes cheaper, the landed cost can fall.
But the change in the pump price does not necessarily equal the change in the international product price because the other components of the formula remain.
2. International oil and refined-product prices
International energy markets are therefore one of the most important influences on Kenyan fuel prices.
Several things can push international petroleum prices higher:
- Rising crude-oil prices
- Refinery outages
- Strong global fuel demand
- Geopolitical conflicts
- Shipping disruptions
- Sanctions
- Changes in available inventories
- Seasonal demand
The relationship can work in reverse too.
When international supply is plentiful and product prices fall, Kenya’s landed cost can decline.
The important qualification is that the price Kenyan consumers see today reflects the pricing cycle, not necessarily the oil-market price on the same day.
3. The Kenya shilling matters
Kenya purchases internationally traded petroleum largely in U.S. dollars, while consumers pay for fuel in Kenyan shillings.
That creates an exchange-rate exposure.
Suppose the international price of diesel remains unchanged in dollars.
If the shilling weakens significantly against the dollar, the same cargo becomes more expensive when converted into shillings.
Conversely, a stronger shilling can reduce the shilling cost of an unchanged dollar-denominated cargo.
This is why movements in the exchange rate can affect fuel prices even when international oil prices are relatively stable.
4. Shipping costs can change the price
Petroleum does not magically appear at Mombasa.
It has to travel there.
Freight and insurance are therefore part of the economics of imported fuel.
This becomes especially important when geopolitical events disrupt shipping routes.
Longer journeys, higher insurance premiums, vessel shortages and increased tanker rates can all increase the cost of getting petroleum to Kenya.
Recent reporting based on the EPRA pricing structure estimated that the landed cost—including freight, insurance and the product’s free-on-board value—represented roughly 48% of the final pump price in the October 2026 pricing cycle.
That percentage is a useful illustration of why international supply conditions can have such a large effect on Kenyan motorists.
5. Mombasa port costs matter too
Once a tanker reaches Kenya, the product has to be discharged.
There are costs associated with handling the cargo at the port and transferring it into the petroleum-storage system.
EPRA’s formula specifically includes jetty handling costs and other primary-storage costs.
These costs are much smaller than the value of the imported fuel itself, but they are still incorporated into the regulated price.
This is one reason having a major port does not make fuel free of logistics costs.
6. Storage adds another cost
Petroleum products cannot all be transported directly from a ship to a filling station.
They must be stored.
Kenya therefore maintains substantial petroleum-storage infrastructure around Mombasa and at inland depots.
EPRA’s formula includes both primary and secondary storage costs, as well as allowances for specified storage losses.
Storage is economically important because fuel inventories represent money tied up before the product is sold.
7. Moving fuel inland costs money
Kenya’s main petroleum-consuming markets are not all located at the coast.
Fuel has to travel from Mombasa toward Nairobi and other parts of the country.
Pipeline transportation is an important part of this system, while road transport also becomes relevant at later distribution stages.
EPRA therefore includes primary transportation and, at the retail stage, transportation from secondary storage depots to retail outlets.
This helps explain why petrol and diesel can cost more inland than at the coast.
For the pricing period 15 September–14 October 2026, for example, EPRA’s maximum price for Super Petrol was KSh214.03 per litre in Nairobi compared with KSh210.87 in Mombasa. Diesel was KSh217.86 in Nairobi versus KSh214.58 in Mombasa.
The difference reflects location-related distribution costs among other factors.
8. Taxes can have a major effect
Government taxes and levies are another major component of the retail price.
EPRA’s wholesale-price formula includes applicable taxes other than VAT, while VAT is included separately.
This means a change in fuel taxation can affect pump prices even when the international cost of petroleum has not changed.
That is also why comparing Kenyan fuel prices with prices in another country can be misleading.
Two countries may purchase petroleum at similar international prices but have very different domestic taxes, distribution systems and regulated margins.
VAT can move the pump price quickly
VAT is particularly visible because changes to the rate can immediately affect the regulated calculation.
In April 2026, for example, the government revised the VAT rate applicable to petroleum products, and EPRA recalculated the maximum retail prices accordingly. EPRA said the change reduced the Nairobi prices of Super Petrol and Diesel by KSh9.37 and KSh10.21 per litre, respectively, compared with the immediately preceding calculation.
This demonstrates an important point:
Fuel prices can change because of tax policy even when the physical fuel itself has not changed.
9. Wholesale and retail margins are regulated
The pump price also contains allowances for businesses involved in getting fuel to consumers.
EPRA’s formula includes a wholesale margin and separate retail margins.
For retail pricing, EPRA identifies:
- Transport from the secondary depot to the retail station
- A margin associated with investment in a benchmark retail station
- A margin associated with operating the benchmark station
These are not simply whatever amount an individual petrol station chooses to add.
The regulator establishes maximum retail prices for the regulated products.
Why different towns have different prices
Kenya does not have one identical pump price nationwide.
EPRA publishes maximum prices for different pricing towns.
That is because moving fuel from Mombasa through the country creates different transportation and distribution costs.
The September–October 2026 schedule illustrates the effect:
- Mombasa: Super Petrol KSh210.87; Diesel KSh214.58
- Nairobi: Super Petrol KSh214.03; Diesel KSh217.86
- Nakuru: Super Petrol KSh212.92; Diesel KSh217.27
- Eldoret: Super Petrol KSh213.69; Diesel KSh218.09
- Kisumu: Super Petrol KSh213.69; Diesel KSh218.08
These are maximum regulated prices for that particular monthly period, not permanent prices.
Why petrol and diesel do not always move together
Petrol and diesel are both refined from crude oil, but they are different products with different international markets.
Their supply and demand can therefore move differently.
Diesel demand is strongly linked to freight, agriculture, construction and industrial activity.
Petrol demand is more closely associated with light-duty vehicles and passenger transport.
Refineries also have different capabilities for producing each product.
Consequently, the international price of diesel can rise faster than petrol—or vice versa.
The 2026 Middle East disruption provided an unusually clear example. In April, Reuters reported that Kenya’s EPRA increased the Nairobi petrol price by 16.1% and diesel by 24.2%, citing sharply higher imported-product costs.
Why prices change monthly rather than every day
International petroleum markets can change every hour.
Kenyan pump prices do not.
EPRA’s regulated system uses a monthly pricing cycle and publishes the new maximum prices on the 15th of each month.
This creates a delay between international-market movements and what consumers see at the pump.
That delay can sometimes work in either direction.
If international prices rise sharply during the pricing window, the increase may appear in a subsequent monthly adjustment.
If prices fall, the benefit may likewise take time to reach the regulated retail price.
Why a fall in crude oil does not guarantee cheaper petrol immediately
Suppose crude oil prices fall today.
That does not necessarily mean Kenyan petrol prices fall tomorrow.
There are several reasons:
- Kenya imports refined products rather than simply crude.
- The relevant import cargoes have specific purchasing and delivery dates.
- Shipping costs can move independently of crude prices.
- The exchange rate can offset part of the decline.
- Taxes and regulated margins do not automatically fall with crude prices.
- EPRA uses a defined monthly pricing period.
The result is that the pump price is a calculated outcome of multiple inputs, not a live reflection of the international crude market.
Why Kenya’s import dependence matters
Kenya’s pricing structure is particularly exposed to international markets because the country imports most of its refined petroleum requirements.
The former Kenya Petroleum Refineries facility in Mombasa stopped processing crude in 2013, leaving Kenya dependent on imported refined products.
That means the country is exposed to both:
the price of the petroleum product itself and the cost of getting that product to Kenya.
This is one reason proposed domestic refining projects have attracted strategic interest.
Would a Kenyan refinery automatically make fuel cheaper?
Not necessarily.
A domestic refinery could reduce dependence on imported finished petroleum products, but it would not eliminate all of the costs that influence fuel prices.
A refinery would still need crude.
It would still require electricity, maintenance, skilled workers, financing, storage and transport infrastructure.
And if the crude were imported, Kenya would remain exposed to international crude prices.
The more realistic potential benefit is greater control and diversification of the supply chain, rather than guaranteed cheap petrol.
What a large Lamu refinery could change
The proposed Dangote refinery at Lamu is intended to add substantial domestic refining capacity.
If it eventually operates as planned, Kenya could import crude and process at least some of it domestically rather than importing all of the corresponding finished fuels.
That could change the composition of the price calculation.
Instead of paying a foreign refinery’s product price and shipping the finished fuel to Kenya, part of the value chain would take place domestically.
But whether consumers ultimately pay less would depend on the refinery’s operating efficiency, financing costs, crude source, product yields, taxes, transportation costs and competitive position.
Refining locally changes the supply chain; it does not automatically dictate the final pump price.
The number that matters most to watch
For anyone trying to understand why Kenyan fuel prices are rising or falling, the most useful question is not simply:
“What is the price of crude oil?”
A better set of questions is:
What has happened to the landed cost of imported petrol or diesel?
What has happened to the Kenya shilling against the dollar?
Have shipping and insurance costs changed?
Have taxes or VAT changed?
What transportation and storage costs apply?
What did EPRA’s latest monthly pricing calculation use?
EPRA’s published formula provides the framework for answering those questions.
The price at the pump is the end of a long chain
A Kenyan motorist paying for a litre of petrol is effectively paying for much more than the liquid itself.
The price incorporates an international petroleum transaction, transportation across the ocean, port handling, storage, inland distribution, financing, taxes, wholesale activity and the final retail operation.
That is why petrol and diesel prices can change even when nothing has changed at the filling station itself.
And it explains why Kenya’s fuel-price debate ultimately extends far beyond the pump: the country’s exposure to international petroleum prices, exchange rates, shipping routes, taxation and refining capacity all converge in the price printed on the EPRA monthly schedule.