Kenya's Ministry of Energy and Petroleum has addressed concerns over the government's fuel importation deal, following remarks from Ugandan President Yoweri Museveni. The ministry explained that the government-to-government arrangement was introduced in 2023 to address a severe shortage of US dollars that threatened the country's fuel supply and foreign exchange reserves. This was necessitated by a $500 million petroleum import bill, which accounted for approximately 35 per cent of Kenya's total import bill at the time.
The government entered into agreements with Saudi Aramco Trading Fujairah, Abu Dhabi National Oil Company Global Trading, and Emirates National Oil Company Singapore on March 10, 2023. These agreements allowed the companies to supply refined petroleum products to Kenya on 180-day credit terms. The arrangement aimed to ease demand for dollars, preserve foreign exchange reserves, and reduce pressure on the Kenya shilling. The ministry stated that the involvement of private oil companies was part of the arrangement's structure.
The international oil companies that signed agreements with Kenya were required to either establish subsidiaries in the country or appoint licensed Kenyan counterparties to handle local logistics. The international suppliers opted for the second option, and the government provided them with a list of licensed oil marketing companies for vetting. The first companies selected were Gulf Energy, Galana Energies, and Oryx Energies Kenya, while One Petroleum, Asharami Synergy, and BE Energy were later nominated.
The ministry provided a timeline of changes to the premiums paid under the G-to-G arrangement. When the deal began, the negotiated freight and premium stood at $97.50 per metric tonne for petrol, $118 for diesel, and $114.25 for Jet A1. The figures were renegotiated in September 2023, and again in March 2025, resulting in reduced premiums. The government claims these premiums have remained fixed despite international market price increases.
The central purpose of the arrangement was not simply to secure cheaper fuel but to address Kenya's dollar shortage. Under the arrangement, petroleum imports for the Kenyan market are paid for in Kenya shillings and backed by a 180-day letter of credit. This reduced immediate demand for dollars and helped preserve and build Kenya's foreign exchange reserves. The number of banks issuing letters of credit has expanded to include several major banks.
The Motorists Association of Kenya (MAK) has called for a forensic audit of the G-to-G petroleum procurement system, demanding disclosure of intermediaries involved, commissions, contracts, pricing formulas, and beneficiaries of the arrangement. The association's demands have placed renewed attention on how petroleum products move from international suppliers to Kenya and neighbouring countries.
The Energy ministry maintains that the private oil companies involved in the G-to-G arrangement were selected by the international suppliers rather than imposed by the Kenyan government. The ministry has defended the arrangement as a response to the dollar shortage that threatened fuel supplies in 2022. The controversy has raised questions about the cost of petroleum supplied to Uganda through Kenya.
Key points
- The G-to-G fuel deal was introduced to address Kenya's dollar shortage and fuel supply crisis.
- Private oil companies were involved in the arrangement, selected by international suppliers.
- The Motorists Association of Kenya has called for a forensic audit of the procurement system.
