Manufacturers Warn of Economic Strain as Fuel Price Protests Disrupt Operations

Manufacturers in Kenya have raised alarm over the ongoing nationwide protests by motorists and transport operators opposing recent fuel price increases, warning that the disruptions are already slowing down production and pushing up the cost of doing business.

In a statement released on Monday, the Kenya Association of Manufacturers (KAM) said the situation is affecting industrial operations across the country, with ripple effects being felt in supply chains, transport systems, and overall economic output.

The concerns come in the wake of the Energy and Petroleum Regulatory Authority (Energy and Petroleum Regulatory Authority) monthly review, which announced a sharp increase in fuel prices that has triggered public outcry and demonstrations in several parts of the country.

According to the review issued on May 14, 2026, super petrol rose to Ksh214.25, diesel to Ksh242.92, and kerosene to Ksh152.78 — levels that stakeholders say are among the highest ever recorded in the country. KAM also noted that fuel prices have increased by an average of Ksh80 between March and May alone.

While acknowledging a temporary government intervention in April 2026 that reduced VAT on petroleum products from 16 per cent to 8 per cent, the manufacturers’ body said the relief has not been enough to cushion businesses and households from rising costs.

Production delays and supply chain strain

KAM said the impact of the fuel hikes is being strongly felt in the manufacturing sector, where fuel remains a key input in production, transport, and distribution.

In its statement, the association warned that the ongoing disruptions are already hurting productivity and efficiency across factories.

“For manufacturers, these disruptions result in interrupted operations, delayed production schedules, supply chain inefficiencies, and reduced productivity, ultimately affecting overall economic performance,” the association said.

The body explained that fuel is not only used in transport but also plays a central role in powering industrial operations, especially through Automotive Gas Oil (AGO), Industrial Diesel Oil (IDO), and Heavy Fuel Oil (HFO), which many factories rely on daily.

It added that manufacturers depend heavily on fuel at every stage of production — from sourcing raw materials to delivering finished goods — making price stability critical for competitiveness.

Rising cost of goods and transport pressure

KAM further warned that the rising fuel costs are likely to push up the prices of essential goods across the market, as manufacturers pass increased production and transport costs to consumers.

The association also noted that electricity costs could rise further due to fuel price adjustments, with the fuel cost component in power tariffs projected to increase to Ksh3.47 per kWh.

In the transport sector, KAM said operators have already begun adjusting fares in response to higher fuel prices, with more increases expected if the situation continues. This, it said, has made daily commuting more expensive, especially for workers who depend on public transport.

The association also pointed to the impact of ongoing protests and transport disruptions, saying they have left many citizens stranded and unable to report to work, further affecting productivity in various sectors.

“For manufacturers, these disruptions have led to interrupted operations, delayed production schedules, supply chain inefficiencies, and reduced productivity, ultimately affecting overall economic performance,” KAM said again, emphasizing the severity of the situation.

KAM has now called on the government to take urgent action to stabilise fuel prices, including reviewing taxes and levies that make up a significant portion of pump prices.

According to the association, taxes and levies — including excise duty, VAT, the road maintenance levy, petroleum development levy, railway development levy, and anti-adulteration levy — account for about 46 per cent of retail fuel prices.

The manufacturers’ body argued that this heavy tax burden continues to strain both businesses and households, especially at a time when the economy is already under pressure from high operational costs and reduced purchasing power.

It further urged the government to consider scrapping or revising some of these charges to ease pressure on consumers and improve business competitiveness.

KAM warned that without immediate intervention, the economy could face deeper strain, including rising commodity prices, weakened supply chains, and reduced industrial output.

It stressed that fuel is a critical driver of Kenya’s economy, affecting agriculture, manufacturing, transport, and logistics — all of which rely heavily on diesel and other petroleum products.

The association said it remains ready to work with government and other stakeholders to find long-term solutions to the recurring fuel crisis.

KAM concluded by urging policymakers to act swiftly to protect both businesses and households from further economic shock, warning that continued price increases could worsen inflation and slow down economic recovery.