Fuel prices dip in major African nations, but for how long?

From the newsletter

Diesel and petrol prices declined marginally in September across South Africa, Nigeria, Egypt and Kenya. However, Nigeria has announced a 5% tax on fossil fuels including petrol and diesel. The act will lead to a significant increase in petrol and diesel prices, furthering the attractiveness of renewable energy solutions as cheaper substitutes.

• Electricity prices remained relatively stable in South Africa, Nigeria, Egypt, and Kenya. However, South Africa plans an 8.8% hike for next year, and Egypt an increase of at least 25% starting in October.

• Every month, Renewables Rising collects publicly sourced data to monitor power price variations in Kenya, South Africa, Egypt, and Nigeria.

More details

• Petrol prices dropped marginally by $0.01 in Kenya. The country’s foreign exchange remained relatively stable as of September 2025, supporting currency stability. Moreover, Kenya recorded stable electricity prices in September, benefiting from high hydrology levels that reduced dependence on costly thermal plants.

• South Africa’s fuel prices also saw a slight decline. During this period, the Rand appreciated slightly against the US Dollar, moving from 17.76 to 17.73 Rand per USD.  Though electricity prices are expected to increase by 3.40 percentage points in July next year, following revenue correction calculations by Eskom.

• In Nigeria, the recently commissioned Dangote oil refinery has faced a temporary setback, with its gasoline unit experiencing a catalyst leak that could lower production until November 2025. This situation will likely cause an uptick in prices in the coming months. 

• Egypt mirrors Nigeria’s approach, aiming to phase out fuel subsidies completely by the end of 2025. This is a key condition of the country’s expanded $8 billion loan program with the International Monetary Fund (IMF). The subsidy removal is expected to trigger market ripple effects and push fuel prices upward.

• Within the global context, African countries remain vulnerable due to heavy reliance on fossil fuels. Nigeria and Egypt's subsidy removals stand out when compared to developments in the regional energy markets.

Our take

• Fossil fuel subsidy removal and an increase in grid prices will allow renewables to compete fairly. However, adding more taxes on fossil fuels will mark their death knell in price competition with renewables.

• The coming months will mark heightened volatility in African energy markets as South Africa and Egypt implement significant price reforms. Greater market transparency and targeted consumer protections are key to stabilising supply and shielding vulnerable users.

• Addressing challenges like limited financing, outdated infrastructure, and project delays is essential for Africa’s energy transition from price shocks. Focusing on fintech solutions, infrastructure upgrades, and streamlined permitting will build resilience and secure affordable, reliable, renewable energy for the continent.