Fuel crisis looms as petroleum dealers threaten to stop supply

Petroleum dealers have threatened to stop the supply of fuel countrywide unless the Energy and Petroleum Regulatory Authority (Epra) reviews fuel prices upwards.

The United Energy and Petroleum Association (Unepa), through its chairperson Irene Kimathi, faulted the authority’s latest review of petroleum product prices for failing to take into account the prevailing supply challenges faced by suppliers due to the ongoing crisis in the Middle East.

“The current prices set by Epra are no longer sustainable. Fuel dealers are therefore left with one option to halt sales unless Epra urgently reviews its pricing criteria for this month,” Ms Kimathi said.

“If customers are to continue receiving fuel, prices must reflect the actual market cost. It is also time for the country to reconsider its fuel infrastructure framework and strengthen its strategic reserve capacity in order to mitigate similar uncertainties in the future,” she added.

Price regulation

The association has urged Epra to immediately suspend the current price regulation to allow the market to reflect the true cost of fuel.

“Failing this, we may have no alternative but to halt our services. Over the past few weeks, we have been operating at a loss, with our working capital being depleted daily. This situation is no longer sustainable,” Ms Kimathi warned.

She noted that fuel shortages have escalated across the country over the past week, affecting independent dealers, many of whom are unable to access fuel. Where fuel is available, they are forced to purchase it at prices nearly equivalent to current pump prices.

“It was expected that when announcing the March–April pump prices, Epra would consider the prevailing supply challenges. However, the prices were maintained despite the sharp increase in fuel costs arising from the war in Iran,” Ms Kimathi said.

According to the dealers, although cargoes are expected to continue arriving at the port, projected volumes are lower than usual, placing significant strain on the price regulation mechanism.

Ms Kimathi further pointed out that Oil Marketing Companies (OMCs) are unwilling to sell at current prices due to the rising landed cost of petroleum products since the Middle East crisis began.

While the government has pledged to subsidise the increase in landed costs, dealers argue that the scale of the subsidy is too large to be sustained in the long term.

“Past experience has shown that the government is often unable to refund subsidy claims on time, making it difficult for businesses to operate effectively. Given the current political climate, business people are not prepared to take such risks,” she said.

Dealers have also warned that if Epra fails to act, they may seek alternative markets in neighbouring countries where fuel prices are not regulated.

“There is a growing temptation to divert fuel to neighbouring countries that do not operate under controlled pricing regimes and therefore offer better returns. If this happens, Kenya’s domestic fuel supply will be placed at even greater risk,” Ms Kimathi cautioned.

On March 14, Epra maintained retail prices for petroleum products for one month, up to April 15, despite the ongoing crisis in the Middle East.

This means that in Nairobi, Super Petrol, Diesel, and Kerosene will continue to retail at Sh178.28, Sh166.54, and Sh152.78, respectively, until April 15.

Value Added Tax

According to EPRA, the prices are inclusive of 16 per cent Value Added Tax (VAT), in line with the Finance Act 2023, the Tax Laws (Amendment) Act 2024, and revised excise duty rates under Legal Notice No. 194 of 2020.

Epra Director General Daniel Kiptoo said the decision was reached after a careful review of imported petroleum costs.

“The average landed cost of imported Super Petrol increased by 1.00 per cent, from US$576.34 per cubic metre in January 2026 to US$582.11 in February 2026. Diesel rose by 8.46 per cent, from US$586.80 to US$636.45 per cubic metre, while Kerosene increased by 6.79 per cent, from US$598.82 to US$639.48 over the same period,” Mr Kiptoo said.

EPRA noted that the calculations were based on vessels received and discharged between February 10 and March 9, 2026.

“Most of these vessels are February-priced cargoes, and the impact of the Middle East situation has not yet been reflected in the prices,” Mr Kiptoo said.

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