Nairobi — The Office of the Auditor-General has flagged a lack of a clear governance framework guiding Kenya's fuel subsidy programme, raising concerns over accountability and sustainability of billions spent to stabilize pump prices.
In its latest audit of the Petroleum Development Fund for the year ended June 2025, the Auditor-General questions the absence of structured mechanisms to guide budgeting and financing of petroleum price stabilization, even as the State continues to deploy significant public resources to cushion consumers.
The report shows that Sh13.18 billion was spent on oil market price stabilization, forming part of the Sh24.5 billion transferred to other government entities during the period under review.
"Review of documents relating to the stabilization program revealed a letter from The National Treasury dated 21 July,2022 which advised the State Department to form a multi-agency team to review the resource requirement and assess the sustainability of the fuel price stabilization programme."
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"However, Management did not constitute the taskforce and continued to make payments towards petroleum price stabilization."
The Auditor-General notes that the failure to establish such a framework undermines visibility into how subsidy decisions are made and financed.
The report indicates that the lack of a framework for stabilization of petroleum prices remains an unresolved issue from previous audits, with management yet to address the matter pending engagement with Parliament's Public Accounts Committee.
Fuel subsidies have played a central role in Kenya's energy policy, particularly during periods of global oil price volatility triggered by disruptions such as the Russia-Ukraine war.
However, the programme has increasingly come under scrutiny over its fiscal burden and opacity.
The stabilization scheme is financed through the Petroleum Development Fund, managed under the Ministry of Energy and Petroleum with oversight from agencies including the Energy and Petroleum Regulatory Authority.
While the fund continues to support price controls, the Auditor-General's findings highlight growing pressure on policymakers to introduce a transparent and sustainable framework to govern fuel subsidies, amid wider concerns over public finance management and rising cost-of-living pressures.
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