Kenya’s construction, transport and logistics sectors woke up to significantly higher operating costs on Wednesday after the Energy and Petroleum Regulatory Authority (EPRA) announced the steepest fuel price increase the country has seen in years.
Effective from April 15 to May 14, 2026, diesel in Nairobi now retails at KSh 206.84 per litre — a jump of KSh 40.30, or 24.2 percent, from the previous cycle’s KSh 166.54.
Super petrol rose by KSh 28.69 per litre to KSh 206.97, while kerosene remained unchanged at KSh 152.78 — spared only by a massive government subsidy drawn from the Petroleum Development Levy Fund that absorbed KSh 108.10 per litre of the true market cost.
New Pump Prices: April 15 – May 14, 2026 (Nairobi)
| Fuel Type | Previous (KSh/L) | New (KSh/L) | Change |
|---|---|---|---|
| Super Petrol | 178.28 | 206.97 | +KSh 28.69 (+16.1%) |
| Diesel | 166.54 | 206.84 | +KSh 40.30 (+24.2%) |
| Kerosene | 152.78 | 152.78 | Unchanged |
Source: EPRA, April 14, 2026. Previous prices from the March–April 2026 cycle.
“The era of KSh 178 fuel is over. For trucking companies and contractors who run on diesel, this is not a gentle adjustment — it is a structural hit.”
What Is Driving the Increase
The root cause traces directly to geopolitical disruption in the Middle East. Since U.S. and Israeli forces launched strikes on Iran on February 28, 2026, global oil markets have experienced a level of volatility not seen since the 1970s oil crisis.
The resulting supply uncertainty has sent crude and refined product prices sharply higher on international markets.
Because Kenya imports all of its refined petroleum products and these imports are priced in U.S. dollars, the country has limited insulation from global shocks.
EPRA’s pricing model also introduces a lag — it is based on previously imported cargoes, which means the March prices now feeding into April pump prices reflect cargoes sourced at the peak of post-strike market panic.
Average Landed Cost of Imported Fuel (per cubic metre)
| Product | Feb 2026 (US$/m³) | Mar 2026 (US$/m³) | % Change |
| Super Petrol | 582.11 | 823.87 | +41.5% |
| Diesel | 636.45 | 1,073.20 | +68.7% |
| Kerosene | 639.48 | 1,311.93 | +105.2% |
Source: EPRA. February–March 2026 cargo data.
The numbers are stark. The landed cost of diesel surged 68.7 percent between February and March alone, while kerosene more than doubled at 105.2 percent.
The Kenya shilling’s continued weakness — averaging 130.08 per U.S. dollar in March — amplified the impact of rising dollar-denominated import costs.
Government Response Falls Short of Offsetting the Shock
The government deployed several cushioning tools ahead of the announcement. VAT on petroleum products was cut from 16 percent to 13 percent, and approximately KSh 6.2 billion was released from the Petroleum Development Levy Fund to stabilise pump prices.
EPRA also confirmed that the substandard fuel cargo delivered by One Petroleum via the vessel MT Paloma was excluded from the pricing computation.
Despite these interventions, the measures could not fully absorb the scale of the landed cost increases.
The stabilisation fund absorbed KSh 4.68 per litre on petrol and KSh 23.92 per litre on diesel — meaningful relief, but insufficient to prevent prices from breaking through the KSh 200 barrier.
| Government Cushioning Measures
VAT on all petroleum products reduced from 16% to 13% | KSh 6.2 billion released from the Petroleum Development Levy (PDL) Fund | Diesel PDL subsidy: KSh 23.92/litre | Kerosene PDL subsidy: KSh 108.10/litre (preventing any pump price increase) | MT Paloma substandard cargo excluded from pricing calculation |
Implications for Kenya’s Construction Sector
Diesel is the lifeblood of Kenya’s construction industry. Every excavator, bulldozer, wheel loader, crusher, concrete mixer, generator and site vehicle runs on it. A 24.2 percent increase in a single month is not a marginal cost adjustment — it is a fundamental repricing of construction operations.
For contractors running fuel-intensive equipment fleets, the immediate impact will be felt in daily operating cost calculations.
A medium-sized contractor running ten machines consuming an average of 20 litres of diesel per hour over a ten-hour shift will see daily fuel costs rise by approximately KSh 80,600 compared to the previous cycle.
For a month-long infrastructure project, that translates to an additional KSh 2.4 million in fuel expenditure alone — before accounting for transport of materials and workers.
Project cost models based on prevailing rates from the March–April cycle are now outdated.
Contractors with fixed-price contracts signed before April 15 face the most acute exposure, particularly on long-horizon government infrastructure projects where price variation clauses may be limited or contested.
A contractor running ten machines on a ten-hour shift will see daily diesel costs jump by roughly KSh 80,000 compared to last month.
Transport and Logistics: Cascading Cost Pressure
The construction sector’s vulnerability extends beyond its own fleet. The movement of building materials — cement, steel, aggregates, precast components — depends entirely on trucking networks that also run on diesel.
With diesel now at KSh 206.84 in Nairobi, long-distance haulage rates are almost certain to be revised upward within days.
The Motorists Association of Kenya anticipated this outcome in a statement issued just hours before the EPRA announcement, warning that any increase would worsen the economic strain on households and businesses already contending with elevated transport and commodity costs. Those warnings proved prescient.
Inland towns away from the coast face even steeper prices due to distribution costs. Kisumu motorists are now paying KSh 209.00 per litre for petrol and KSh 208.87 for diesel, while remote eastern and northern areas — key corridors for infrastructure development — are crossing KSh 209 per litre for both fuels.
The MT Paloma Scandal: A Sector on Edge
The fuel price shock arrives against the backdrop of a deepening procurement scandal that has already destabilised Kenya’s energy supply chain.
Three senior officials resigned in early April following investigations that revealed domestic fuel stock data may have been falsified to create an artificial shortage.
The scheme allegedly resulted in the irregular procurement of an emergency cargo aboard the MT Paloma vessel — outside the Government-to-Government framework, at inflated prices, and involving fuel of reportedly substandard quality.
EPRA confirmed that the MT Paloma cargo was excluded from this pricing cycle’s calculation.
But the scandal has raised broader questions about the integrity of Kenya’s fuel procurement and stock management systems — systems that construction firms and logistics operators depend on for supply security.
| MT Paloma Procurement Scandal — Key Facts
Three senior officials resigned in early April 2026 | Investigations allege domestic fuel stock data was falsified to manufacture a shortage | Emergency cargo procured aboard MT Paloma outside G2G framework | Fuel reportedly of substandard quality and procured at inflated prices | EPRA excluded MT Paloma cargo from April–May price computation | Kenya Pipeline Corporation has assured adequate national stocks |
Outlook: How Much Further Could Prices Rise?
The April–May cycle reflects March import costs. If global oil market disruption continues — and the geopolitical situation in the Middle East shows no sign of immediate resolution — May’s pricing cycle could reflect even higher landed costs unless the shilling strengthens significantly or international crude prices correct.
The pricing lag built into EPRA’s formula means consumers are always paying for yesterday’s market.
In a period of rapidly rising prices, that lag works against consumers. In a falling market, it provides a buffer. For now, the direction is firmly upward.
Industry stakeholders in construction, transport and manufacturing will be watching the next EPRA review — due around May 14, 2026 — with considerable anxiety.
Any further increase beyond the KSh 206 level would represent territory not seen in Kenya’s post-subsidy era.
| What This Means for Construction Projects — At a Glance
Daily fuel costs for a 10-machine fleet rise by ~KSh 80,000 vs. March cycle Fixed-price contracts signed before April 15 face unbudgeted cost exposure Material haulage rates expected to rise within days as transporters reprice routes Remote project sites in eastern and northern Kenya face diesel above KSh 209/litre Contractors should audit fuel variation clauses in all active contracts immediately Generator and standby power costs for sites rise proportionally with diesel |
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