President William Ruto’s administration has assured Kenyans that it will protect them from rising international fuel prices amid supply chain disruptions occasioned by the Middle East conflict. Kenyans are bracing for high fuel prices. According to National Treasury Cabinet Secretary (CS) John Mbadi, growing tensions in the Middle East are putting pressure on the world economy, posing threats to trade, energy markets, and financial stability. However, the CS reiterated that the country’s economy remains resilient, supported by ongoing economic reforms, with the Gross Domestic Product (GDP) expected to expand by 5.3% in 2026 and 2027. “The Middle East conflict poses key risks, including rising oil prices, potential fuel cost increases, and disruptions to trade, exports, and supply chains,” Mbadi said in a statement on X on Thursday, April 2.
Will Kenya stabilise fuel prices? Mbadi pointed out that in order to maintain economic activity, the government has implemented mitigation measures such as the Fuel Stabilisation Fund (setting aside KSh 17 billion), export market diversification, and targeted support. “The government has put in place mitigation measures, including the Fuel Stabilisation Fund, export market diversification, and targeted support to sustain economic activity,” he assured. The CS said Kenya is also restructuring itself to take advantage of the new prospects, such as using Lamu Port more frequently as a centre for regional logistics. Treasury CS John Mbadi assured Kenyans of relief at the pump. Will VAT on fuel be reviewed? The government will also review value-added tax (VAT) on petroleum products to cushion consumers if the Middle East conflict persists beyond the May toJune pump price review period.
A reassessment of the 16% VAT on petrol, diesel, and kerosene is considered necessary to help avert a projected increase in pump prices during the April 15 to May 14 pricing cycle. However, Mbadi warned that despite the VAT review, prices will jump in the next review on Tuesday, April 14. “In the next pricing cycle, however, product prices, insurance, war risk and demurrage rates are expected to increase due to the conflict. We will play around with VAT so that the prices do not increase too much,” Mbadi told the the National Assembly Committee on Finance and Planning.
