The government has announced a KSh945 million fuel subsidy and extended the reduced 8 per cent Value Added Tax (VAT) on petroleum products until October 14, 2026, in a move aimed at shielding consumers and businesses from rising global oil prices.

Energy and Petroleum Cabinet Secretary Opiyo Wandayi made the announcement on Tuesday ahead of the Energy and Petroleum Regulatory Authority (EPRA)’s monthly fuel price review for the July–August 2026 pricing cycle.

The intervention is intended to cushion households, transport operators and businesses against volatility in the international oil market.

Wandayi said the extension of the reduced VAT rate was agreed upon in consultation with the National Treasury, allowing consumers to continue benefiting from the lower tax rate for another three months.

In addition, the government will inject KSh945 million from the Petroleum Development Levy (PDL) during the July–August pricing cycle to help stabilize pump prices and cushion motorists from potential increases. The levy has previously been used to absorb the impact of sharp rises in international fuel prices.

The Cabinet Secretary attributed the government’s intervention to renewed instability in global energy markets following escalating tensions in the Middle East, particularly around the Strait of Hormuz, a critical global oil shipping route.

He noted that disruptions to commercial shipping and rising international crude oil prices have heightened uncertainty in global fuel markets.

Despite the external pressures, Wandayi assured Kenyans that the country has sufficient fuel stocks and that supplies remain stable.

He credited the Government-to-Government (G-to-G) fuel import arrangement with ensuring uninterrupted fuel deliveries while helping Kenya avoid sharp increases in freight and import costs.