The National Assembly’s Budget and Appropriations Committee has demanded an immediate examination of the Petroleum Development Levy (PDL).
The committee chaired by Alego Usonga MP Samuel Atandi is raising new concerns about the fund’s sustainability, transparency, and effectiveness, as it has become crucial to the nation’s fuel price stabilization initiatives.
In their report on the 2026-27 budget estimates presented to Parliament, the committee instructed the National Treasury to conduct a thorough review of the levy in coordination with the State Department for Petroleum and present findings to Parliament by September 30.
The lawmakers indicated that the review should establish a long-term framework for managing fuel price fluctuations while improving accountability in the fund’s utilization.
“The review must incorporate a framework for sustainable fuel price stabilization, defined expenditure limits, prediction of fuel price fluctuations, and improved accountability and reporting processes,” the committee suggested.
The request arrives as the Petroleum Development Levy has become one of the most discussed charges in the energy sector.
The levy, currently set at Sh5.40 per litre of fuel, has increasingly been utilized to protect consumers from abrupt rises in global oil prices.
President William Ruto and Energy Cabinet Secretary Opiyo Wandayi have consistently defended the fund, asserting that it has protected households and businesses from severe fuel price shocks that would have otherwise driven pump prices substantially higher.
Government officials have also pointed to the levy as a critical measure that allowed the nation to navigate periods of instability in the international oil market without transferring the complete cost to consumers.
Nevertheless, lawmakers and industry stakeholders are doubting whether the fund is being administered efficiently and whether drivers are receiving fair value for the billions of shillings collected each year.
During budget deliberations, numerous MPs expressed worries about the lack of transparency in the fund’s operations and its connection to the government-to-government (G-to-G) fuel import arrangement.
Kisumu Woman Representative Ruth Odinga informed the committee that greater attention should be focused on the Petroleum Development Levy instead of proposals to cut fuel taxes.
“It is praiseworthy that we are seeking solutions. I believe we should examine the petroleum levy fund more thoroughly than the fuel levy. The PDL is the area where we lack understanding,” she stated.
Kiharu MP Ndindi Nyoro shared these concerns, noting that while resources are necessary for road maintenance and other infrastructure programs, Parliament should thoroughly investigate the Petroleum Development Levy as it is the main funding source for fuel stabilization.
“PDL is the origin of fuel stabilization and is what we need to focus on, which is why I have proposed increased allocations to subsidies,” Nyoro explained.
He also supported calls for a reassessment of the G-to-G import arrangement.
“Regarding G2G, I agree that we should open up the market because it is one of the factors making our fuel expensive,” he added.
The committee’s apprehensions are strengthened by findings in the recent audit report by Auditor-General Nancy Gathungu on the Petroleum Development Fund.
According to the audit, the fund collected Sh25.92 billion during the 2024-25 financial year against a target of Sh30.54 billion, leading to a shortfall of Sh4.62 billion, or 15 percent of the projected revenue.
Concurrently, the fund disbursed Sh26.08 billion, surpassing its actual collections by Sh167.8 million.
Gathungu cautioned that the revenue shortfall could have affected planned activities and adversely affected service delivery.
The audit also highlighted the fund’s ongoing deficit status. The Petroleum Development Fund showed a deficit of Sh167.8 million during the year, though this represented an improvement from the Sh606.1 million deficit recorded in the previous financial year.
The deficit reduced the fund’s accumulated surplus from Sh2.99 billion at the beginning of the year to Sh2.82 billion by June 30, 2025.
“The deficit trend, if not controlled, will continue to diminish the Fund’s reserves to a level where it may not be able to fund its operations and meet its financial obligations when they become due,” the Auditor General warned.
The parliamentary committee’s review is anticipated to determine if the current structure of the Petroleum Development Levy remains sufficient to support fuel stabilization while preserving the fund’s financial stability.
The recommendations could also influence future reforms in the fuel pricing system as the government strives to balance consumer protection, fiscal sustainability, and energy security amidst ongoing fluctuations in global oil markets.