Ruto seeks fresh KSh420bn fuel deal with UAE
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Ruto seeks renegotiation with UAE (United Arab Emirates) to ease some clauses the government to government fuel deal
Ruto seeks renegotiation with UAE (United Arab Emirates) to ease some clauses the government to government fuel deal.
Less than two months prior to the first payment of an estimated $3 billion (Sh420 billion) debt accumulated during the period, Treasury and Ministry of Energy officials have set in motion plans to renegotiate the government-to-government agreement for the supply of petroleum products on credit with the United Arab Emirates (UAE) and Saudi Arabia.
A delegation from the government’s Energy and Petroleum Regulatory Authority (Epra), National Treasury, and Energy Ministry has been negotiating in the UAE to get some of the terms of the government-to-government deal relaxed.
At the end of September, Kenya is anticipated to make the first installment of the $500 million (Sh70 billion) debt owed to state-owned UAE firms that have provided petroleum products on credit for the last two years.
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The government-to-government agreement was intended to strengthen the shilling by reducing the monthly scramble by oil marketers for dollars, but instead, the Kenyan currency has weakened further, trading at an average of 140 units to the dollar as opposed to around 130 units when the agreement was signed in March.
According to reports, Kenyan government wants to re-negotiate some fixed terms in the agreement that have since proved expensive, owing to a drop in prices of petroleum products.
Epra Director-General, Daniel Kiptoo, said it is too early to reveal the outcome of the ongoing negotiations, adding that it is “work in progress”.
The fixed terms in the agreement, which were supposed to cushion Kenya from fuel price volatility, have seen the country take a hit as a fall in prices of petroleum products globally failed to reµect at the pump.
Companies that export fuel to neighbouring landlocked countries have in recent weeks preferred to buy the product in Tanzania and transport it through Uganda, denying Kenya the much-needed earnings.
The fact that supply volumes have remained fixed even as local demand for fuel drops has resulted in a market glut, triggering unease among confirming banks which fear that they could lose money if imported fuel is not sold out.
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