Treasury moves to cut fuel levy allocation in fresh bid to ease pump prices

In the proposed amendments to the Road Maintenance Levy Fund Act, Treasury seeks to cut the allocation to the Road Annuity Fund from KSh 3 to KSh 1.50 per litre of petroleum products, effectively halving the amount directed towards financing road construction under the annuity programme.

The proposal is contained in the Road Maintenance Levy Fund (Amendment) Bill, 2026, which is currently before Parliament.

“The section is amended in subsection (2) by deleting the words ‘three shillings’ and substituting therefor the words ‘one shilling and fifty cents’,” the Bill reads in part.

The move comes amid sustained efforts by the government to bring down the cost of fuel, which surged locally following a supply crisis linked to geopolitical tensions involving Iran.

By reducing the portion of the levy earmarked for annuity road projects, the government is effectively creating room within the fuel pricing structure to ease pressure on pump prices, without necessarily eliminating the levy itself.

The Road Annuity Fund finances infrastructure under the annuity model, where contractors construct roads upfront and are repaid over time by the government.

This follows an earlier intervention where the government cut Value Added Tax (VAT) on petroleum products from 13 per cent to 8 per cent, a measure aimed at stabilising retail fuel prices in the wake of rising global oil costs.

In Nairobi, the maximum retail price for Super Petrol now stands at Ksh.197.60 per litre, with Diesel retailing at Ksh.196.63 and Kerosene remains at Ksh.152.78 per litre.