The government introduced fuel price controls in mid-December, ostensibly to keep a lid on rising fuel prices. Although consumers could see some short-term benefits, the interference is unwarranted and could impair investment to the detriment of longer-term supply. The controls, under consideration for over a year, impose a maximum profit at both the wholesale (KSh6/litre-7.5 US cents/litre) and the retail (KSh3/litre) level above a fixed base price, which will be recalculated on a monthly basis by the energy regulatory commission based on international trends. The new rules, detailed in the Energy (Petroleum Pricing) Regulations 2010, apply to all fuels and all parts of the supply chain, and impose hefty penalties for firms that fail to comply.

However, the restrictions have sparked inevitable anger from the fuel supply industry, which claims not have to been consulted and points out that prices are relatively high in Kenya because of major deficiencies in vital infrastructure. This includes the oil refinery in Mombasa (50% owned by the state and 50% by India's Essar) and the fuel pipeline network (run by the parastatal Kenya Pipeline Company), which are both operating well below capacity and are in urgent need of fresh investment. A lack of pipeline capacity in particular necessitates the use of costly road transport. Moreover, although the controls are ostensibly based on South Africa's model, Kenya's version is much stricter, covers diesel as well as petrol and does not have an independent agency determining base levels and mark-ups. Marketers also think that the government's price formula is flawed because it fails to include all costs (especially investment in storage depots and other infrastructure) and underrates transport tariffs. Given that margins in the sector are already small, the price controls will deter investment in retailing and distribution, to the detriment of longer-term supply.