Saudi Arabia oil dealers jittery with Ruto oil deal, Energy CS
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Saudi Arabia oil dealers still doubting Kenya's decision to ditch dollars for Ksh in international transactions in the Ruto fuel deal
Saudi Arabia oil dealers still doubting Kenya’s decision to ditch dollars for Ksh in international transactions in the Ruto fuel deal.
On Tuesday, June 13, Energy Cabinet Secretary Davis Chirchir pleaded for Kenyans to give the government more time so that international oil corporations will accept Kenyan shillings as payment for petroleum.
After meeting with the Parliamentary Committee on Energy, the CS told the media that certain Saudi oil dealers still had doubts about the country’s choice to replace dollars with Kenyan shillings in international trade.
Some, he noted, believed that it would affect their businesses
However, Chirchir claimed that after two months of acquiring fuel under the agreement, many of the investors had started to support the idea.
According to the CS, the more investors adopted the new purchase deals, the easier it would become to reduce fuel prices in the country.
“We have used the deal for two months now and the international oil companies who sell to us began understanding that the risk of the payment method is minimal as opposed to what they had earlier believed,” he stated.
Chirchir added that the only way to reduce the fuel prices at the time was to renegotiate the percentage paid as insurance cost during purchase.
“A risk taker has to insure the purchase and that costs about 0.7 percent of the total cost. We will have to renegotiate that percentage and try getting it to zero percent to allow us to save Ksh1 on the cost of petroleum per litre,” he explained.
The parliamentary committee meeting came two days before the monthly fuel review by the Energy and Petroleum Regulatory Authority (EPRA).
The meeting was aimed at scrutinizing internally generated revenue and exploring viable measures to curb escalating prices that continued to burden consumers nationwide.
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Despite the move by the government to import fuel products using the Kenyan Shilling instead of the Dollar, fuel prices have risen since January 2023.
Experts explained that the purchase would lead to a decrease in the price of the commodity at the pump because the government still had to convert the amount to dollars to meet the standards for the international market.
On June 6, officials from the Energy and Petroleum Regulation Authority (EPRA) were unable to explain how the Government-to-Government fuel deal will benefit Kenyan citizens.
The National Assembly Public Investments Committee on Commercial Affairs and Energy (PICCAE) questioned why the deal, aimed at cushioning Kenyans from the high fuel prices, failed to yield results.
“Representatives of EPRA appearing before the committee expressed their inability to adequately address the inquiries regarding the matter,” the committee stated in its report after the meeting.
Ruto selected three foreign companies to supply fuel to Kenya including Amarco, Abu Dhabi National Oil Corporation Global Trading (ADNOC), and National Oil Company (NOC).
EPRA will announce fuel prices for June/July on Wednesday, June 14.
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