The Energy and Petroleum Regulatory Authority (EPRA) has assured oil marketing companies (OMCs) that they will receive advance sales compensation for fuel volumes accessed beyond their allocations, a move intended to maintain uninterrupted petroleum supplies and compensate marketers for exposure to price changes. The commitment was outlined in a letter dated October 27, 2026, addressed to chief executives of oil marketing companies.
In the letter, signed by EPRA Director General Eng. Edward M. Kinyua, the regulator said volumes obtained in excess of those factored into the current and subsequent supply cycles would qualify for compensation. The arrangement follows correspondence from the Principal Secretary in the State Department for Petroleum dated October 1, 2026.
EPRA said the measure was intended to ensure continued fuel availability across Kenya while compensating oil marketers for the financial exposure created by the time lag between fuel procurement costs and regulated selling prices.
Under the arrangement, excess volumes and any additional costs incurred in accessing them will be considered on a first-in, first-out basis. The regulator said the volumes and associated costs would be verified using data from the Kenya Revenue Authority (KRA).
The mechanism is significant for oil marketers operating in a market where petroleum prices are regulated monthly, while international prices, shipping expenses and other import costs can change between pricing reviews. Such differences can expose companies to financial pressure when the cost of acquiring fuel does not immediately align with the prices permitted at the pump.
Kenya's fuel pricing framework is administered by EPRA, which sets maximum wholesale and retail prices for petroleum products. The regulator's October pricing cycle, effective from October 15 to November 14, raised Nairobi's maximum retail price for super petrol to Sh226.96 per litre, diesel to Sh227.76 and kerosene to Sh219.87.
However, compensation for oil marketers has attracted scrutiny over how the costs are calculated and who ultimately bears them. In March 2026, the Consumers Federation of Kenya (COFEK) criticised a similar compensation arrangement, arguing that consumers and retailers were excluded from the framework and questioning EPRA's authority to administer such payments.
The latest letter does not specify the total amount of compensation to be paid, the rate per litre, or the individual companies and volumes that will qualify. It also does not provide a payment timetable, leaving the financial implications of the arrangement unclear.
The KRA verification requirement is expected to play a central role in establishing eligible volumes and additional costs. The first-in, first-out approach is intended to determine how excess volumes and their associated expenses are accounted for.
For consumers and independent fuel retailers, the key question is whether the compensation arrangement will affect future pump-price calculations or create additional costs elsewhere in the petroleum supply chain. EPRA's letter does not explain how any compensation will be funded or whether it will be reflected in subsequent price reviews.
The commitment comes as Kenya faces pressure from higher petroleum import costs and rising fuel prices. Its eventual impact will depend on the verification process, the scale of eligible claims and how the government and regulator manage the costs without disrupting fuel availability.
