Kenyan manufacturers want govt to cut taxes on fuel, lower production costs

Nairobi, Kenya – Kenyan manufacturers have urged the government to review fuel taxes as part of the move to reduce pump prices.

This followed the ongoing strike organised by the transport sector players, after the Energy and Petroleum Regulatory Authority (EPRA) raised pump prices.

In a statement seen by News Nine, the Kenya Association of Manufacturers (KAM) urged the government to implement further measures, including a review of fuel taxes, to reduce fuel costs.

“We call on the government to urgently intervene and implement measures to reduce fuel costs and cushion households, support businesses, and safeguard economic stability. The government should consider reviewing various fuel-related taxes and levies to ease pressure on the economy and protect the competitiveness and productivity of local manufacturers,” said KAM CEO Tobias Alando.

Alando noted that the measures to revise fuel levies would play a critical role in lowering the cost of commodities, stabilising supply chains, and supporting broader economic recovery.

Fuel taxes in Kenya

Fuel taxes and levies, including Excise Duty, VAT, the Road Maintenance Levy, Petroleum Development Levy, Railway Development Levy, and the Anti-Adulteration Levy, account for approximately 46% of pump prices.

KAM acknowledged the government’s move to reduce VAT on petroleum products from 16% to 8% as a measure to ease the cost burden on consumers and businesses.

However, the association warned that fuel prices have a far-reaching impact across the economy, directly influencing the cost of transportation, food production, agriculture, manufacturing, and the movement of goods and services nationwide, ultimately affecting the cost of living and the competitiveness of businesses.

“For the manufacturing sector, fuel is a critical input throughout the value chain from sourcing of raw materials to production and the distribution of finished goods.

“Kenyan manufacturers rely heavily on Automotive Gas Oil (AGO), Industrial Diesel Oil (IDO), and Heavy Fuel Oil (HFO) in their operations. Access to affordable, reliable, and quality fuel is therefore essential to sustaining industrial productivity and competitiveness,” Alando added.