In April 2026, Kenyans witnessed an unprecedented surge in pump prices, with Petrol and Diesel crossing the historic KSh 200 mark. While global oil prices are often blamed, the final price you pay at the station is a complex cocktail of international costs, local logistics, and a heavy layer of government taxes.
To understand why a liter of petrol costs what it does, we have to follow the money from the Strait of Hormuz to the local pump.
1. The Landed Cost (The Foundation)
The “Landed Cost” is the actual price of the fuel when it arrives at the Port of Mombasa. It includes the cost of the refined product, ocean freight, and insurance.
In the April 2026 review, the landed cost for Diesel spiked by 68.72% due to geopolitical tensions in the Middle East. Additionally, because fuel is bought in US Dollars, the performance of the Kenyan Shilling (averaging 130.08 in March) plays a massive role. If the Shilling weakens, the landed cost rises automatically.
2. Government Taxes and Levies (The Heavy Lift)
Taxes are the most controversial part of the fuel chain, often making up nearly 40% to 50% of the total price. In 2026, the government has adjusted these frequently to balance the budget against public outcry.
3. Storage and Distribution Costs
Once the fuel is offloaded in Mombasa, it must be moved across the country.
Pipeline Charges: Paid to the Kenya Pipeline Company (KPC) for transporting fuel to depots in Nairobi, Nakuru, Eldoret, and Kisumu.
Depot Losses: A small percentage factored in for evaporation and handling during storage.
Bridging Costs: The cost of trucking fuel from the nearest pipeline depot to your specific town.
4. The Oil Marketing Companies (OMC) Margin
This is the profit kept by the oil companies (like Vivo Energy, TotalEnergies, or Rubis) and the independent gas station owners.
Wholesale Margin: Covers the overhead of the big suppliers.
Retail Margin: The profit for the person running the local petrol station.
5. The “Stabilization” Factor (Subsidies)
In the 2026 crisis, the government deployed billions of shillings from the Petroleum Development Fund to “stabilize” prices.
How it works: When the landed cost is too high, the government pays the oil marketers a portion of the cost so they don’t pass the full hike to the consumer.
The April 2026 Reality: Without a KSh 96.56 per litre subsidy on Kerosene, the poor would have faced even more catastrophic lighting and cooking costs.
Summary: Why the “Record High”?
The 2026 record highs were caused by a “Triple Threat”:
Highest-ever Landed Costs due to Middle East supply shocks.
Weakening Shilling increasing the cost of dollar-denominated imports.
Fiscal Pressure on the Treasury, which initially tried to keep VAT high to pay off national debt before being forced to cut it to 8% amid protests.
