3 months 8p.c fuel VAT relief to cushion consumers

Energy and Petroleum Cabinet Secretary Opiyo Wandayi on July 14, 2026. [Edward Kiplimo, Standard]

The government has extended by another three months the reduced 8 percent Value Added Tax (VAT) on petroleum products.

This will offer relief to motorists, businesses and households grappling with  rising global oil market uncertainty. The tax relief, which was due to expire today, will now remain in force until October 14, 2026. 

The announcement was made by Energy and Petroleum Cabinet Secretary Opiyo Wandayi, who said the extension was reached in consultation with the National Treasury as part of broader efforts to shield Kenyans from the impact of volatile international fuel prices.

"In addition, as part of the Government's commitment to cushioning households and businesses from international market volatility, in consultation with the National Treasury, we have extended the application period for 8% Value Added Tax (VAT) on petroleum products for a further three months until October 14, 2026," the CS said. 

To further stabilize pump prices, the government will also inject Sh945 million from the Petroleum Development Levy during the July-August 2026 pricing cycle to sustain current fuel prices despite mounting pressure in global energy markets. 

The move comes amid renewed tensions in the Middle East, particularly around the Strait of Hormuz, a critical global oil shipping route. Military escalation in the region has disrupted commercial shipping, reduced oil tanker traffic and heightened uncertainty in international petroleum markets. 

Despite the global instability, Wandayi assured Kenyans that the country has sufficient fuel stocks and that supplies remain uninterrupted.

He said Kenya's Government-to-Government (G2G) fuel import arrangement has enabled the country to continue receiving scheduled fuel cargoes while shielding consumers from escalating freight and insurance costs that have affected countries relying on open market purchases. 

"The Government-to-Government arrangement has strengthened Kenya's energy security while reducing pressure on foreign exchange demand. It has improved supply predictability and enhanced resilience within our petroleum supply chain," he noted. 

The Cabinet Secretary said adequate fuel stocks remain available nationwide and emphasized that the government has invested heavily in building a resilient petroleum sector capable of withstanding external shocks.

He reassured motorists, public transport operators, farmers, manufacturers, investors and businesses that there is no threat to fuel availability, adding that the government remains committed to ensuring uninterrupted supply while keeping petroleum products as affordable as possible. 

The extension of the reduced VAT rate is expected to ease pressure on transport costs and the prices of goods and services, providing temporary relief to consumers as the government monitors developments in the global oil market.