Kenya Extends Fuel VAT Cut to Stabilize Pump Prices

The Government of Kenya extended a reduced 8 percent Value Added Tax (VAT) on petroleum products for an additional three months, moving the expiration date from July 14 to October 14, 2026. This measure maintains a previous tax cut from 16 percent implemented in April to protect households and businesses from price hikes driven by global oil market volatility and conflicts involving the U.S., Israel, and Iran.

Energy and Petroleum Cabinet Secretary Opiyo Wandayi announced that the government will also inject 945 million shillings from the Petroleum Development Levy during the July-August 2026 pricing cycle to stabilize costs for petrol, diesel, and kerosene. Despite these efforts, officials warned that the subsidy fund is nearly depleted, with over 20 billion shillings spent since April.

These interventions follow a May strike by transport operators and are intended to lower transportation costs and ease inflationary pressures. Wandayi stated that Government-to-Government import arrangements have maintained fuel security and shielded Kenya from escalating insurance and freight costs amid tensions around the Strait of Hormuz.