The Kenyan government has come out to defend the Government-to-Government (G-to-G) arrangement for importing refined petroleum products. Energy and Petroleum Cabinet Secretary Opiyo Wandayi stated that the deal was introduced to address a severe dollar shortage that threatened fuel supplies and wider economic stability in 2022. When President William Ruto's administration assumed office on September 13, 2022, the country faced serious security-of-supply challenges, with some fuel stations operating with minimal or no stocks.
At the time, oil imports were required to be paid for in US dollars within five days of cargo receipt, while refined petroleum products accounted for about Sh65 Billion of the country's import bill, equivalent to roughly 35 per cent. The Ministry said Kenya experienced an acute scarcity of US Dollars, complicating the supply of refined petroleum products among other critical imports such as pharmaceuticals and fertilizers. This scarcity forced oil marketing companies to source dollars from several banks, creating additional demand and contributing to the rapid depreciation of the Kenya shilling.
To mitigate this, the Government entered into Master Framework Agreements on March 10, 2023, with Aramco Trading Fujairah, Abu Dhabi National Oil Company Global Trading, and Emirates National Oil Company Singapore for the supply of refined petroleum products on 180-day credit terms. The arrangement was intended to ease immediate dollar demand and allow the country to accumulate additional foreign reserves estimated at Sh65 Billion per month. It also sought to revive the interbank foreign exchange market and reduce speculative activity that had contributed to exchange-rate volatility.
The Government defended the selection of local oil marketing companies as counterparties, saying international oil companies were allowed to choose licensed Kenyan firms after vetting. The initial companies selected were Gulf Energy, Galana Energies, and Oryx Energies Kenya, before One Petroleum, Asharami Synergy, and BE Energy were subsequently nominated. Wandayi said the arrangement also allows payment for petroleum products in Kenya shillings, backed by a 180-day letter of credit, helping preserve foreign-exchange reserves and support exchange-rate stability.
On pricing, the Ministry said negotiated freight and premium charges had fallen since the arrangement began. Super Petrol, initially set at Sh12,675 per metric tonne, was renegotiated to Sh11,700 in September 2023 and Sh10,920 in March 2025. Diesel fell from Sh15,340 to Sh11,440 and later Sh10,140, while Jet A1 declined from Sh14,852.50 to Sh12,610 per metric tonne. The Government said the negotiated premiums remained fixed even during the Middle East crisis, when spot-market offers reportedly reached as high as Sh52,000 per metric tonne.
The Ministry described G-to-G as a local solution to a local problem and said the arrangement had helped strengthen Kenya's position as a regional petroleum logistics hub. The statement comes as renewed public attention focuses on the structure and impact of the fuel-importation arrangement, with the Government seeking to explain its origins, pricing, and claimed economic benefits. Wandayi said the Government would continue supporting trading partners to strengthen the Northern Corridor as a major route for petroleum supplies to East Africa and the Great Lakes region.
The Government's defense of the G-to-G fuel deal comes at a time when the arrangement is facing renewed public scrutiny. Key aspects of the deal, including its structure, pricing, and economic benefits, have been subject to debate. The Government has maintained that the deal has helped alleviate dollar shortages, stabilize fuel supplies, and support economic stability. As the debate continues, the Government's commitment to transparency and accountability in the deal remains crucial to addressing public concerns.
Key points
- The G-to-G fuel deal was introduced to address a severe dollar shortage that threatened fuel supplies and wider economic stability in 2022.
- The arrangement allows payment for petroleum products in Kenya shillings, backed by a 180-day letter of credit, helping preserve foreign-exchange reserves and support exchange-rate stability.
- Negotiated freight and premium charges have fallen since the arrangement began, with Super Petrol, diesel, and Jet A1 prices experiencing significant reductions.
