Kenyan government has further extended an oil supply deal with three Gulf companies, a move aimed to help to relieve pressure on country’s local currency.
President William Ruto’s presidential cabinet approved the extension during a meeting held on Tuesday at the Statehouse in Nairobi.
Ruto’s cabinet said is aimed at stabilizing the Kenyan Shilling and ensuring a steady supply of fuel across the country.
The agreement was originally reached in March 2023 with Saudi Aramco, Abu Dhabi National Oil Company, and Emirates National Oil Company, which is now extended in September 2023 to this month.
However ,the timeline for the deal remain undisclosed.
“This arrangement has eased the monthly demand for U.S. dollars for petroleum imports, stabilizing the shilling-dollar exchange rate.
“The agreement had also helped reduce pump prices for consumers,” the presidential Cabinet added.
This arrangement with the Gulf firms comes with 180-day credit terms, allowing the country to build up dollars for the purchase over time rather than requiring about $500 million every month to pay for imports.
Before the agreement with Gulf companies
Prior to the agreement with the three Gulf oil companies, Kenya had been importing petroleum products through the Open Tender System (OTS).
Gulf Energy, Galana Energies, and Asharami & One Petroleum are the local firms importing fuel and paying in dollars.
The rest of the Kenyan oil marketers pay for their cargoes in Kenyan shillings.
Kenya, however, renegotiated the agreement last year, shifting it from a set time frame to defined gasoline levels after Uganda’s withdrawal.
Kenya also had included Uganda as part of the market while negotiating the deal with the Gulf majors in late 2022.
Speaking on the new development, the cabinet added:
“This arrangement has eased the monthly demand for US dollars for petroleum imports, stabilizing the shilling-dollar exchange rate at KSh129 from a high of KSh166 and reducing pump prices from KSh 217 per liter of petrol to KSh 177.”
