Statistar Consult

⛽ Fuel Prices Across East Africa: Why Is Uganda Cheaper Than Kenya Despite Being Landlocked?

The latest regional fuel price comparison has once again sparked debate after Uganda posted lower fuel prices than Kenya — even though Uganda imports most of its petroleum products through the Port of Mombasa.

Current comparison highlights:

🇰🇪 Kenya
Super Petrol: Ksh 214.25
Diesel: Ksh 242.92

🇺🇬 Uganda
Super Petrol: Ksh 179.74
Diesel: Ksh 174.37

This raises an important question:

👉 How can a landlocked country importing fuel through Kenya end up with cheaper fuel prices than Kenya itself?

The answer largely lies in taxation, levies, exchange rate policies, and pricing structures — not just transport costs.

Key Reasons Uganda’s Fuel Prices Are Lower

🔹 Lower Fuel Taxes and Levies
Kenya imposes multiple taxes and regulatory levies on petroleum products, including VAT, Road Maintenance Levy, Petroleum Development Levy, Railway Development Levy, Anti-Adulteration Levy, among others. These significantly raise the pump price.

Uganda’s tax burden on fuel is comparatively lower, making the final retail price cheaper despite transportation costs.

🔹 Subsidy and Policy Approaches
Uganda has historically maintained a more flexible pricing structure with fewer state-imposed charges compared to Kenya’s highly taxed petroleum regime.

🔹 Exchange Rate and Market Dynamics
Currency performance and fuel procurement arrangements also influence pump prices. Differences in import contracts and distributor margins can affect final consumer pricing.

🔹 Kenya’s Heavy Dependence on Fuel Taxation
Fuel taxes are a major source of government revenue in Kenya. As a result, pump prices often reflect fiscal policy decisions as much as global oil prices.

The Bigger Picture

Fuel prices affect nearly every sector of the economy — transport, food, manufacturing, logistics, and household expenses. When fuel costs rise, the cost of living and doing business also increases.

For Kenya, the discussion may no longer be only about global oil prices, but also about:

✔️ The sustainability of fuel taxation
✔️ The balance between revenue collection and affordability
✔️ Regional competitiveness in trade and manufacturing

💡 Key Takeaway:
Uganda’s lower fuel prices demonstrate that transport distance alone does not determine pump prices. Tax policy, levies, and government pricing frameworks often have a much bigger impact than geography.

📊 SHA vs NHIF: What the Numbers Suggest for Kenya’s Informal Sector

A conservative analysis based on published contribution bands indicates that the average SHA premium for households in the informal sector may now range between Kshs 8,100 – 8,400 annually, compared to the former NHIF fixed annual contribution of Kshs 6,000.

This translates to an estimated increase of approximately 35% – 40% for many informal sector contributors.

Under the previous NHIF structure:
✅ Annual Premium: Kshs 6,000
✅ Monthly Contribution: Kshs 500

Estimated SHA contribution levels:
🔹 Annual Premium: Kshs 8,100 – 8,400
🔹 Monthly Contribution: Kshs 675 – 700

While SHA aims to create a more inclusive and sustainable healthcare financing model, the transition also raises important conversations around affordability, compliance, and financial planning for informal sector households.

💡 Key Takeaway:
The shift from NHIF to SHA has significantly increased healthcare contribution obligations for many Kenyans in the informal sector, making financial preparedness and income protection even more important.

Fuel Prices Surge Again: Diesel Records Sharpest Increase

The latest fuel price review by EPRA has delivered another major blow to households, transporters, and businesses across Kenya.

Effective May 14, 2026:

⛽ Petrol prices have increased by Sh16.65, bringing the retail price in Nairobi to Sh214.25 per litre.

⛽ Diesel prices have risen sharply by Sh46.29, pushing the pump price to Sh242.92 per litre — one of the steepest increases witnessed in recent years.

⛽ Kerosene remains unchanged at Sh152.78 per litre.

Among the three products, diesel stands out as the biggest concern.

Why?

Because diesel powers the backbone of the economy:
🚛 Transport and logistics
🏭 Manufacturing
🚜 Agriculture
🏗 Construction
⚡ Backup power generation

A significant rise in diesel prices often triggers a ripple effect across the economy, increasing the cost of transporting goods, food production, public transport, and overall business operations.

The likely impact:
📈 Higher cost of living
📈 Increased transport fares
📈 Pressure on inflation
📈 Reduced margins for businesses and SMEs

For many businesses already operating under tight economic conditions, rising fuel costs may force difficult decisions around pricing, expansion, and operational efficiency.

The bigger conversation now shifts to sustainability:
How can businesses adapt in a high-cost operating environment?
How can policymakers balance energy pricing, taxation, and economic growth?

At Statistar Consult, we believe data-driven analysis is essential in helping organizations anticipate market shifts, manage operational risks, and make informed strategic decisions.