Kenya's expanding fuel retail market is driving a fresh wave of competition among oil marketers, with some petrol stations lowering pump prices below the maximum rates set by the Energy and Petroleum Regulatory Authority (EPRA) as they battle to attract and retain customers.
AfriFueling Convener John Njogu said the growing number of fuel stations across the country has reshaped the market, giving motorists more options while forcing both established companies and new entrants to compete through pricing rather than relying only on brand recognition.
Speaking on Radio Generation on Tuesday, Njogu explained that the difference in pricing is largely driven by the structure of the fuel business, where companies operating in both the wholesale and retail segments have more room to reduce prices without affecting their operations.
"We have a wholesale market and then we have a retail market," Njogu said, explaining that wholesalers with larger fuel volumes can afford to share part of their profit margins with consumers instead of retaining the full markup.
"What you find is that a company that is in the wholesale market might decide that since I am off-taking at the wholesale level, let me split my margin with the customer instead of retaining it," he said.
He said this approach allows some marketers to sell fuel several shillings below EPRA's monthly maximum pump prices while remaining profitable, especially as they seek to grow their customer base in an increasingly crowded market.
Njogu noted that Kenya's fuel retail network has grown rapidly over the past decade, creating tougher competition among dealers across the country.
"From 2017 till now, we doubled the number of our stations. We are at around close to 6,000 stations across the nation, leading in East Africa by a huge margin," he said.
He added that Kenya also remains East Africa's biggest consumer of petroleum products, with monthly fuel consumption far exceeding that of neighbouring countries.
"Kenya is consuming about 600 million litres a month compared to Uganda around 200 million. Tanzania is around 300 million," he said.
According to Njogu, the expanding market has opened the door for smaller retailers, many of whom use lower prices as their main selling point to compete with larger and more established fuel brands.
"If you compare the number of sites they have, plus you who is just a new entrant and you have one or two sites, how do you announce yourself to the market? How do you differentiate yourself? I think that's how you see the disparity in pricing. It's all about market positioning," Njogu said.
He said the increased rivalry has worked in favour of consumers, with some petrol stations offering discounts of several shillings per litre by accepting lower profit margins while remaining commercially viable.
Under Kenya's petroleum pricing system, EPRA publishes maximum wholesale and retail fuel prices every month in line with the Petroleum Act, 2019 and the Petroleum (Pricing) Regulations, 2022.
The regulations bar licensed fuel dealers from selling Super Petrol, Diesel or Kerosene above the prices announced by the regulator. However, retailers are allowed to charge lower prices, giving them room to compete through discounts where it is commercially possible.
For the pricing cycle running from July 15 to August 14, 2026, EPRA set the maximum pump price in Nairobi at Sh214.03 per litre for Super Petrol, Sh222.86 for Diesel and Sh191.38 for Kerosene. While dealers cannot charge above those prices, they are free to sell fuel at lower rates.