Ruto’s economic advisor explains effect of Uganda and 4 EAC countries ditching Kenyan fuel
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Ruto's economic advisor David Ndii says Kenya will still benefit even if Uganda and other EAC countries ditch Kenyan fuel over G-to-G deal
Ruto’s economic advisor David Ndii says Kenya will still benefit even if Uganda and other EAC countries ditch Kenyan fuel over G-to-G deal.
Ndii clarified that the majority of the oil will still be delivered via the Kenyan pipeline in response to questions from Kenyans on Uganda’s recent decision to buy oil directly from foreign firms instead of through Kenyan enterprises.
Ndii said that a tariff fee will be placed on the transits, in accordance with international practice.
Conversely, the transportation of the fuel products will be documented as a service export for the country.
“If Uganda and/or any other countries opt to import directly, the products will become transit goods. A transit tariff for the use of the pipeline will apply- this is standard international practice which will now be recorded in our Balance of payments as a service export.
“That figure is likely to be considerably higher than the financing cost savings,” he expounded.
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Economists had expressed concern about how Uganda’s and other EAC countries’ actions will impact the nation’s economy, prompting Ndii to respond.
Led by economic expert Mohamed Wehliye, economists advised President William Ruto to work on a win-win formula for the countries so as not to back out of the Kenyan oil deal.
“Alternatively, we can negotiate with the foreign Oil Marketing Companies (OMCs) to give us two prices. One for domestic OMCs & the other for Airlines & foreign OMCs who buy oil in cash.
“We can’t pass through our credit line costs to folks who pay in cash! We must sit & come up with a win-win regional G2G,” he opined.
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