Taxes, subsidies, and price floors: How Ghana and Kenya are managing fuel price shocks

A new comparative analysis of fuel pricing between Kenya and Ghana highlights significant differences in pump prices, tax burdens, and government responses to rising global fuel costs.

The data shows that while both countries are experiencing upward pressure on fuel prices, Kenya is facing steeper increases at the pump, whereas Ghana has adopted targeted interventions to cushion consumers.

Higher pump prices in Kenya

In Kenya, petrol is currently selling at about KSh206.97 per litre (approximately GHC17.60), with taxes and levies accounting for a substantial KSh82.09 (GHC6.98) of the price. Diesel prices are similarly high at KSh206.84 (GHC17.60) per litre.

Fuel price increases in Kenya have also been significant, with petrol rising by KSh28.69 (GHC2.45) per litre and diesel by KSh40.30 (GHC3.43).

Between February and March 2026, landing costs surged sharply, with petrol increasing by 41.53 percent, diesel by 68.72 percent, and kerosene by over 105 percent.

Despite these increases, the Kenyan government has implemented some relief measures, including subsidies estimated at KSh6.2 billion through the Petroleum Development Levy Fund and a reduction in VAT from 16 percent to 13 percent.

Ghana’s moderated price increases

In Ghana, petrol (Super XP) has a base price of GHC11.57 per litre, with taxes and levies estimated at around GHC2.55. Diesel (Diesel XP) has a base price of GHC14.35, with taxes of about GHC2.50.

Recent price adjustments show increases of GHC1.11 per litre for petrol and GHC2.93 for diesel.

Although Ghana has also recorded rising landing costs — 19.41 percent for petrol, 43 percent for diesel, and about 23 percent for kerosene — these increases are notably lower than those seen in Kenya.

Policy differences shape outcomes

The divergence in consumer prices appears to be driven largely by differing policy approaches.

In Ghana, authorities have implemented price floors through the National Petroleum Authority (NPA) to stabilise market competition, alongside targeted absorption of costs estimated at GHC2.36 per litre.

Additional measures include a ban on fuel allowances for ministers and state appointees, aimed at reducing public expenditure.

In contrast, Kenya has relied more heavily on subsidies and tax adjustments to manage rising fuel costs.

The comparison suggests that while Kenya is experiencing higher pump prices and sharper import cost increases, Ghana’s combination of price controls and targeted interventions is helping to moderate the impact on consumers.

However, both countries continue to grapple with the broader challenge of global fuel price volatility, which remains a key driver of domestic pricing pressures.