Consumption of diesel and super petrol has hit record levels in the six months to June amid a retreat in fuel prices and additional cars on the roads.
Data collated by the Kenya National Bureau of Statistics (KNBS) shows that fuel use rose to a record 1.93 million metric tonnes in the first half of 2025, surpassing the 1.92 million tonnes recorded in 2022 before demand collapsed under the weight of soaring prices.
The rebound marked a 9.4 percent jump from first half of 2024, when consumption slumped to 1.76 million tonnes — the lowest in five years.
The recovery in demand coincided with a retreat in retail fuel prices. During the first six months of this year, average petrol price dropped to Sh176.05 per litre in Nairobi, down from a peak of Sh198.23 in 2024.
Diesel — the workhorse fuel for transport, commercial farming and industry — eased to Sh165.64 per litre from Sh185.83 a year earlier, according to the data based on monthly prices published by the Energy and Petroleum Regulatory Authority (Epra).
The rebound came in a period purchase of new motor vehicles also rebounded, growing by a quarter to 6,360 units.
New car sales jumped 25.05 percent to 5,086 in the first half of 2024, marking the first growth in three years.
“The stable forex and inflation rates are driving optimism in the market,” Isuzu East Africa, the market leader in showroom vehicle sales, told the Business Daily in an email earlier in the year.
“The storm appears to be over because of the positive macro-economic indicators, with promising signs of recovery and growth.”
Uptake of fuel in the review period had shrunk for two straight years, falling from 1.84 million tonnes in 2023 to 1.76 million tonnes in 2024, reflecting the impact of doubling of value added tax to 16 percent and rollback of subsidies.
The rebound in fuel consumption partly helped lift the government’s collections from the Petroleum Development Levy (PDL) by nearly nine percent to Sh26.37 billion in the year ended June 2025, up from Sh24.34 billion a year earlier.
The PDL, a fuel stabilisation levy introduced in 2021, draws funding from deductions at the pump at the rate of Sh5.40 per litre of petrol and diesel, and Sh0.40 for kerosene.
President William Ruto, who took power in September 2022, stopped fuel price cushion using taxes, restricting the subsidy to proceeds from PDL.
To ease pressure on demand for dollars on forex markets by local oil firms, the Ruto administration further entered into a government-to-government fuel supply deal with the United Arab Emirates and Saudi Arabia in March 2023.
The arrangement allowed Saudi Arabia’s State-owned Aramco as well as UAE’s Emirates National Oil Corporation (Enoc) and the Abu Dhabi National Oil Corporation Global Trading (Adnoc) to supply fuel under a six-month credit deal, backed by letters of credit from commercial banks.
The arrangement replaced an open tendering system that required about $500 million (Sh64.62 billion) a month to be paid within five days of delivery — a huge strain on foreign exchange reserves.
The government has hailed the arrangement for easing dollar demand and shielding the shilling from speculative pressure despite criticism that the deal has created a monopoly for three Gulf state-owned suppliers and limited competition in the local market.
“G-to-G arrangement has eliminated USD spot purchases by about 140 oil marketing companies (OMCs), which previously created speculative tendencies. USD purchases are now being progressively undertaken by only LC-issuing banks,” Daniel Kiptoo, the director-general of the Energy and Petroleum Regulatory Authority, said in June.
Kenya has renewed the contract to purchase fuel on credit from the three Gulf firms for two years from December.
The companies agreed to reduce petroleum prices by 14 percent per tonne in the extended fuel supply deal.
Joseph Otieno, Commissioner for Petroleum at the Ministry of Energy, said the supply deal run beyond 2027 after Uganda, which was initially part of the deal, opted to order its supply directly.
“Even as we extended by two years, we had not lifted the volumes from the previous years. It means that the lifting of the remnant volumes will spill over to the end of this year, and then you start accounting for the two-year extension. That takes you to roughly the end of 2027 or early 2028 thereabout,” Mr Otieno told the Business Daily in an earlier interview.
