Government of Kenya extends fuel supply deal with Gulf Oil firms (Saudi Aramco & UAE) through 2024.
Kenya has extended by one year a deal to purchase fuel on credit directly from three state-owned Gulf firms according to reports.
Daniel Kiptoo, Director-General of the Energy and Petroleum Regulatory Authority (EPRA), said that the new arrangement permits the three companies to supply the oil products on credit through December 2024.
The three companies are Saudi Aramco, Emirate’s National Oil Company (NOC), and Abu Dhabi National Oil Corporation Global Trading (ADNOC).
The first payment, totaling Ksh 12 billion, is now due on September 25, 2023 with the second payment of Ksh 60 billion set to be due by the end of October, .
The new oil deal is likely to attract the attention of the other oil marketers who had been locked out of bidding for the oil until January 2024.
The agreement, which was inked in March, was only intended to cover the three local energy companies Gulf Energies, Oryx, and Galana energy Kenya Limited for a period of nine months.
The three companies were given tender by the government to import the oil for the time period and sell it to other marketers.
Then, 96 other oil companies that wanted a piece of the deal filed a lawsuit, claiming they were being priced out of the market.
Ruto, however, praised the deal at the time as good and would save the country Ksh68 billion every month as well as easing pressure on the dollar.
“As a country, we can buy fuel using local currency and from this month of April, all our fuel marketers will be able to use the shilling in buying our fuel products,” the President stated in April.
Without the deal, Kenya would have been required to raise Ksh74 billion (USD500 million) in dollars every month to pay for the imported oil.
Kenyans have, however, been skeptical of whether the deal achieved its intended goal of guaranteeing oil supply at an affordable rate.
The fuel prices have soared to historic high despite the deal as it was intendent to lower the cost.
In its latest review, EPRA increased the prices of the three key products which now retail at Ksh211.64, Diesel (Ksh200.99), and Kerosene (ksh202.61) per litre.