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The Kenya Pipeline Company (KPC) has applied for increased transportation and storage tariffs, a move that could significantly raise fuel pump prices and impact the cost of living across the country.
Kenyans are bracing for a potential increase in fuel prices following an application by the Kenya Pipeline Company (KPC) to the Energy and Petroleum Regulatory Authority (EPRA) for a review of its transportation and storage tariffs. This proposed adjustment, if approved, is expected to translate into higher costs at the pump, further burdening consumers already grappling with economic pressures.
EPRA, the body mandated to regulate Kenya's energy sector, including petroleum infrastructure and pricing, is currently conducting public participation forums to gather feedback on KPC's proposal. These sessions are crucial as they allow various stakeholders, including the public and industry players, to voice their concerns and suggestions regarding the tariff changes.
KPC's tariffs are typically reviewed and approved every three years through a public participatory process facilitated by EPRA. The last adjustment to pipeline transport charges occurred in July 2024, when EPRA increased them by 6.75 percent, from KSh 5.12 to KSh 5.44 per cubic metre. Storage fees at KPC's four depots also saw an increase of 7.95 percent, reaching KSh 4,175 per cubic metre. These charges are a significant component of the overall fuel pump price.
Previous tariff reviews have often been met with opposition from consumers due to their direct impact on retail fuel prices. For instance, during a review in 2022, the Consumer Federation of Kenya (COFEK) pushed back against a proposed hike, citing its cost implications for consumers.
Under the Energy Act of Kenya 2019, EPRA is tasked with ensuring fair and reasonable tariffs for KPC's services. Section 11B of the Act specifically empowers the authority to set, review, and approve tariffs and contracts related to common user petroleum facilities and products. Additionally, Section 10H mandates EPRA to protect the interests of consumers, investments, and other stakeholders, while Section 1634 clarifies that tariffs must be just and reasonable.
The current tariff review also comes amidst the ongoing process of KPC's partial privatisation. In October 2025, the National Assembly approved the government's plan to privatise KPC, allowing for the sale of up to 65% of its stake while retaining a minimum of 35%. This move is projected to raise approximately KSh 100 billion, earmarked for development spending, pending bills, or debt management. However, the privatisation plan has faced legal challenges, with Busia Senator Okiya Omtatah vowing to contest it in court, deeming it unconstitutional.
Oil traders and various other stakeholders have expressed opposition to the proposed tariff increase, arguing that it will negatively affect the economy, especially given the current economic climate. They anticipate that manufacturers and service providers will likely pass on the increased costs to consumers. Kenyans have consistently reacted with frustration to fuel price hikes, noting the ripple effect on daily expenses and earnings.
The proposed tariff hike carries significant risks for the Kenyan economy. Increased fuel prices directly impact transportation costs, which in turn affect the prices of goods and services, potentially leading to higher inflation. Businesses may face increased operational costs, which could stifle economic growth. Consumers, particularly those with limited disposable income, will experience a reduction in purchasing power.
Furthermore, higher fuel costs in Kenya could impact the country's competitiveness in the regional market. Tanzania, with its more efficient fuel transportation infrastructure, has emerged as a competitor, potentially luring importers away from Kenya if prices become uncompetitive.
While KPC argues that the tariff hike is necessary to cushion the state corporation from losses and finance infrastructure projects, including capacity enhancement of the Mombasa-Nairobi pipeline, the specific details of the proposed increases and their justification are subject to scrutiny. There are ongoing concerns about transparency and accountability in KPC's tariff-setting methodology.
EPRA is currently holding public consultative workshops in various locations across the country to gather views on KPC's proposed tariff review for the 2025/2026 to 2027/2028 financial years. These sessions are designed to inform the final decision on the tariff adjustments. The current tariff period was extended for two months, ending in November 2024.
All eyes will be on EPRA's final decision following the public participation process. The outcome will determine the extent of the fuel price increase and its subsequent impact on the economy. Additionally, the legal challenge against KPC's privatisation by Senator Okiya Omtatah will be a key development to watch, as it could influence the company's future operational and financial landscape.
