The Auditor General has raised questions on the stabilization of fuel pump prices and the implementation of the Government-to-Government (G-to-G) petroleum importation scheme during the 2023/24 financial year.
- •According to the report, the State Department for Petroleum paid KSh 47.26 billion to Oil Marketing Companies (OMCs) as compensation for maintaining lower pump prices under the fuel price stabilization program.
- •However, these payments were flagged as “unsupported”, with the Auditor General citing a lack of oversight mechanisms, planning structures, and clear governance frameworks.
- •Despite advice from the National Treasury, the State Department failed to establish a Multi-Agency Team to evaluate the full financial impact and long-term viability of the program, and to develop the required governance and compensation mechanisms.
In March 2023, the Government launched a direct G-to-G petroleum importation system to cushion the economy against a rapidly depreciating Kenyan shilling. The initiative was based on Memoranda of Understanding (MoUs) and Master Framework Agreements (MFAs) between Kenya and international oil suppliers.
The Auditor General’s review of this framework exposed serious governance flaws. Importers were nominated contrary to terms in the MoUs, the termination of a previously nominated importer lacked supporting documentation, two new importers were appointed without justification, Five banks included in key tripartite agreements had no legally binding Deeds of Adherence on record.
Moreover, financial practices under the scheme raised additional red flags. Over USD 19.85 million (KSh 2.54 billion) was recovered through pump prices as part of shortfall financing — without approval from the Energy and Petroleum Regulatory Authority (EPRA) Board.
Legal fees amounting to KSh 954.65 million were included in pump prices during the July to September 2023 pricing cycles. The report notes that the purpose, beneficiaries, and approval for these charges were not disclosed.
Another KSh 3.98 billion in demurrage charges — fees paid when vessels are delayed in offloading petroleum — was passed on to consumers. But these charges lacked the necessary backing documentation, such as claims from suppliers or committee minutes approving such payments.
Recently, the Energy & Petroleum Regulatory Authority (EPRA) announced a substantial increase in the maximum wholesale and retail prices of petroleum products, effective from July 15, 2025, to August 14, 2025.
The price of Super Petrol will rise by KShs 8.99 per litre, Diesel by KShs. 8.67 per litre, and Kerosene by a notable KSh 9.65 per litre.
The upward revision is primarily attributed to a significant increase in the average landed cost of imported petroleum products between May and June 2025.
For consumers in Nairobi, the new pump prices effective midnight, July 15th, will see Super Petrol retail at KShs. 186.31, Diesel at KShs. 171.58, and Kerosene at KShs. 156.58 per litre. Other major towns will also experience corresponding price increases. For instance, in Mombasa, Super Petrol will retail at KShs. 183.02, Diesel at KShs. 168.30, and Kerosene at KShs. 153.29.
This latest adjustment in fuel prices is expected to exert further inflationary pressure on the Kenyan economy, with potential ripple effects on transportation costs, manufacturing, and the overall cost of living. Businesses and households alike are likely to feel the pinch, especially considering existing economic pressures from other essential goods and services.
The fallout from the report could have far-reaching implications for government policy and public trust.
