The Kenya Revenue Authority (KRA) has disclosed that the government relinquished approximately KSh9.1 billion in tax revenue over a two-month period following the reduction of Value Added Tax (VAT) on petroleum products from 16 percent to 8 percent.
Speaking before the Senate Energy Committee, KRA Commissioner for Customs and Border Control Dr. Lilian Nyawanda said the tax relief measure was introduced to cushion consumers from the effects of volatile global fuel prices and ease the cost of living.
According to Dr. Nyawanda, the tax adjustment was part of broader government interventions aimed at protecting households and businesses from escalating energy costs driven by fluctuations in international oil markets.
KRA Clarifies Status of MT PALOMA Fuel Cargo
The commissioner also addressed concerns regarding a shipment of Premium Motor Spirit (PMS) carried by the vessel MT PALOMA, which has attracted public attention in recent weeks.
She clarified that the consignment never entered the Kenyan market and was instead redirected to other destinations. Consequently, customs declarations linked to the shipment were cancelled.
Dr. Nyawanda further revealed that KSh5.1 billion in taxes paid through the principal importer arrangement would not be lost. Instead, the amount will be reassigned to future customs entries for petroleum imports by the affected Oil Marketing Companies (OMCs).
Role of KRA in Fuel Supply Chain
Nyawanda emphasized that KRA continues to play a critical role in supporting the country’s petroleum supply chain through efficient customs processes and trade facilitation.
She explained that the authority oversees the clearance of fuel imports after relevant Partner Government Agencies complete mandatory quality and compliance checks.
“KRA supports the petroleum supply chain through the expeditious processing of import documentation, timely assessment and collection of duties, VAT, levies and other statutory charges, as well as the prompt release of cargo at petroleum depots in Mombasa and across the country,” she told senators.
The commissioner noted that KRA’s responsibilities are limited to customs clearance, tax administration, levy collection, transit monitoring and trade facilitation as provided under the law.
Government Maintains Kenya Has Sufficient Fuel Stocks
The disclosure comes days after Energy Cabinet Secretary Opiyo Wandayi assured Kenyans that the country has adequate fuel supplies despite ongoing uncertainties in global energy markets.
Wandayi said fuel imports continue to arrive on schedule, storage facilities remain adequately stocked, and distribution networks are functioning normally across the country.
“Kenya remains secure in terms of fuel supply. Shipments are arriving as planned, storage levels are stable and distribution is proceeding without interruption,” the CS said.
He added that operations at the Port of Mombasa and inland fuel depots continue to run efficiently, dismissing concerns about any national shortage.
G-to-G Framework Helping Stabilize Market
Wandayi attributed the country’s relative stability to the government-to-government (G-to-G) fuel procurement framework, which he said has helped reduce exposure to global market volatility.
According to the CS, the arrangement has enabled Kenya to source fuel from multiple international markets, including Europe, the United States Gulf Coast, India and the Red Sea region.
“This diversification strengthens resilience, reduces reliance on any single route and ensures continuity even when traditional supply channels face disruptions,” he said.
The CS noted that the framework has helped maintain freight and premium costs at between $78 and $97 per tonne, significantly lower than rates reported in some countries where costs have risen to between $250 and $300 per tonne.
Signs of Global Relief Emerging
Wandayi further indicated that international fuel markets are beginning to show signs of stabilization, offering hope for reduced pressure on fuel prices in the coming months.
While cautioning that global conditions remain unpredictable, he said improving supply routes and changing demand patterns are contributing to a gradual easing of market pressures.
“There are encouraging signs that international fuel markets may begin to stabilize. Although uncertainties remain, current trends suggest a more favorable outlook than what we have experienced in recent months,” he said.
The government maintains that ongoing interventions, including tax relief measures and the G-to-G procurement arrangement, are helping protect consumers from sharper increases in fuel prices while ensuring uninterrupted supply nationwide.
