Kenyans Set for Fuel Price Relief as Gov't Moves to Slash Levy in New Bill

Photo collage of President William Ruto

Thousands of Kenyan motorists could soon enjoy lower fuel costs after the National Treasury of Kenya proposed a 50 per cent cut to the fuel levy allocation directed to the Road Annuity Fund.

Reports indicate that the proposal is contained in the Road Maintenance Levy Fund (Amendment) Bill, 2026, currently before Parliament, and seeks to reduce the amount channelled to the fund from Ksh3 per litre to Ksh1.50 per litre.

If approved, the move could save consumers nearly 80 cents for every Ksh100 spent on fuel, offering fresh relief to households and businesses grappling with high transport costs.

Under the current law, part of the Road Maintenance Levy collected from every litre of fuel is ring-fenced for the Road Annuity Fund, a programme used by the government to finance road construction projects through deferred payments to contractors.

National Treasury of Kenya

According to estimates, a motorist filling a 50-litre tank could save between Ksh75 and Ksh80.

Public transport operators also stand to benefit. A 14-seater matatu operating on the Rongai-Nairobi CBD route and consuming around 46 litres daily could save about Ksh75 each day, while a 33-seater Isuzu NQR on the same route may save roughly Ksh120 daily.

However, the proposal raises fresh questions over road financing.

The Road Annuity Programme has long relied on the Ksh3 per litre allocation as a repayment guarantee for contractors and financiers who fund road projects upfront.

Traffic jam in Nairobi

The planned reduction comes at a time when President William Ruto’s administration has already committed part of the same levy to raise billions through bond-backed borrowing.

The government previously securitised Ksh12 of the Ksh25-per-litre levy to raise Ksh300 billion for road pending bills and contractor payments.

Economists now say Treasury Cabinet Secretary John Mbadi may need to clarify how the reduced annuity allocation will affect ongoing road projects and existing repayment commitments.

The proposal is expected to spark heated debate in Parliament as lawmakers weigh consumer relief against the future of infrastructure funding.