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Road works spark highest diesel consumption growth
Road construction in Bomet East on September 16, 2025. Kenya’s payment of Sh56.9 billion in pending bills has revived road projects and lifted construction growth.
Photo credit: Vitalis Kimutai | Nation Media Group
Diesel consumption recorded its first double-digit growth in nearly a decade, driven by resumption of major infrastructure projects and a rebounding economic activity.
Latest data from the Kenya National Bureau of Statistics (KNBS) shows that demand for Automotive Gas Oil (AGO), commonly known as diesel, rose by 10.28 percent to 2.42 million tonnes in 2025. This marks the fastest annual growth since 2016, when diesel use grew by 11.41 percent to 2.32 million tonnes.
The resurgence in diesel consumption coincides with the resumption of key road projects that had stalled across the country due to estimated Sh650 billion pending bills to both international and local contractors.
The State in 2025 unlocked the stalled projects in a return-to-work formula, in which it paid Sh123billion as part-payment of the debt that accrued between 2005 and December 2024.
A weakening fiscal space, largely due to loan repayments, made it difficult for the Exchequer to free up funds for other items like clearing debt owed to road contractors, leading to stalled projects.
The struggles forced the government to securitise part of the Roads Maintenance Levy (RML) of Sh25 from every litre of diesel and petrol and use it to get commercial loans. The government securitised Sh7 from the RML in 2024 and a further Sh5 from July last year, bringing the total to Sh12, which has been securitised to raise the billions needed to pay contractors.
Many contractors resumed work from April 2025, boosting the demand for diesel.
The data, compiled by KNBS and sourced from the Ministry of Energy and the Energy and Petroleum Regulatory Authority (Epra), further shows that consumption of motor spirit, or petrol, rose by 12.55 percent to 1.66 million tonnes in 2025.
This was the steepest growth since 2021, when demand for petrol rebounded following the pandemic-induced travel restrictions to jump by 11.40 percent to 1.55 million tonnes. The rebound followed a period of weak demand in 2022 and 2023, when fuel consumption declined as households and businesses cut back in response to surging costs of essential commodities.
That downturn was largely driven by elevated fuel prices linked to disruptions in global supply chains following Russia’s war in Ukraine, which blocked key trade routes, while turmoil in foreign exchange markets led to dollar shortages and a sharp depreciation of the shilling, pushing up the cost of imported fuel.
As a result, average diesel prices rose steeply from Sh107.64 per litre in 2021 to Sh138.78 in 2022 and Sh179.54 in 2023, before easing marginally by 1.09 percent to Sh177.58 in 2024. Super petrol followed a similar trajectory, climbing to Sh193.83 per litre in 2023 from Sh156.54 in 2022 and Sh124.96 in 2021, before dipping a marginal 1.40 percent to Sh191.13 in 2024.
The easing of prices continued into 2025, with petrol averaging Sh181.39 per litre from Sh191.76 in 2024, while diesel fell to Sh169.56 from Sh178.32. The overall rise in petroleum products consumption also coincides with a resurgence in economic activity.
The World Bank, for instance, raised Kenya’s growth outlook for 2025 to 4.9 percent in late November from 4.5 percent in May, citing an unexpected recovery in the construction industry.
“Quarter two 2025 represented an upward surprise for us. There was a faster-than-expected recovery in the construction sector. We didn’t anticipate that before,” Jorge Tudela Pye, World Bank Country Economist for Kenya, said on November 24, 2025.
The rise in petrol consumption, on the other hand, indicates improved household mobility and spending, largely linked to rising incomes and urban economic activity.
Fuel consumption is widely regarded as a proxy for economic activity, closely tracking movement in sectors such as trade, manufacturing, and agriculture. The sharp rise in uptake suggests increased distribution of goods, higher production activity and a broader pickup in commercial operations.
The near-flat growth in diesel consumption in 2024, which rose a measly 0.31 percent year-on-year, underscores how significant the 2025 rebound was. Similarly, demand for petrol had grown a modest 1.80 percent in 2024 before accelerating into double digits.
Going forward, increased fuel use also poses risks because it translates into a higher import bill for Kenya. The country relies entirely on imported petroleum products, and increased use of diesel and petrol will potentially exert pressure on foreign exchange reserves and the shilling at a time when the Israel-Iran war has curtailed supply.
“Risk of oil-driven inflation is emerging. Higher imported inflation could filter through to local pump prices and surge transport and food costs,” analysts at NCBA Investment Bank wrote in an economic note on March 9.
“Following significant potential second-round inflationary effects from this, we now see Kenya’s monetary policy committee exercising caution on further policy easing in the April meeting.”
