Energy and Petroleum Cabinet Secretary Opiyo Wandayi has defended Kenya’s Government-to-Government (G-to-G) fuel import arrangement, saying it was introduced to address a severe shortage of US dollars that threatened fuel supplies and the wider economy.
In a statement on Sunday, Wandayi said the arrangement, signed in March 2023 with Saudi Aramco, Abu Dhabi National Oil Company (ADNOC) and Emirates National Oil Company (ENOC), was designed to ease pressure on foreign-exchange reserves by allowing suppliers to provide fuel on 180-day credit terms.
At the time, Kenya was spending about $500m a month on refined petroleum imports, accounting for about 35% of the country's total import bill, he said.
“The main objective of the G-to-G arrangement was to alleviate US Dollar liquidity challenges by ensuring accumulation of additional foreign reserves to the tune of US Dollars 500 million per month,” Wandayi said.
He said the arrangement had also helped revive the interbank market and reduce pressure on the shilling.
Under the deal, the international oil companies were allowed to appoint licensed Kenyan oil marketing companies as local counterparts for logistics and distribution.
Wandayi said the government provided the suppliers with a list of licensed oil marketers, after which Gulf Energy, Galana Energies and Oryx Energies were initially selected. One Petroleum, Asharami Synergy and BE Energy were later added.
He said the freight and premium charges had also fallen through negotiations, with petrol dropping from $97.50 to $84 per metric tonne, diesel from $118 to $78 and Jet A1 from $114.25 to $97 between the start of the arrangement and March 2025.
“These premiums have remained fixed even during the height of the Middle East crisis when the spot market offers went up to as high as US Dollar 400 per metric ton,” he said.
Wandayi said the arrangement had ensured security of supply while allowing petroleum imports to be paid for in Kenya shillings through 180-day letters of credit.
His defence comes amid growing calls for an audit and full publication of the deal following remarks by Ugandan President Yoweri Museveni that Uganda had been buying petroleum products through middlemen in Kenya.
Speaking on Thursday, Museveni said a Kenyan senator alerted him that Uganda was buying fuel through Kenyan middlemen.
“The Republic of Uganda was buying petroleum products through middlemen in Kenya... the person who woke me up first was a senator from Kenya,” he said.
Museveni said Uganda subsequently shifted towards sourcing fuel through the Uganda National Oil Company and Vitol, with figures presented at the launch showing premiums falling from $118 to $83 per tonne for diesel, $97.50 to $61.50 for petrol and $114.25 to $79.25 for aviation fuel.
Jubilee Deputy Party Leader Fred Matiang’i and the Motorist Association of Kenya have since called for publication of the G-to-G agreement and a forensic audit covering intermediaries, commissions, contracts, pricing and beneficiaries.