By GPC Reporter
Kenya has defended its Government-to-Government (G-to-G) fuel importation arrangement, saying it helped avert a potentially severe fuel supply crisis and ease pressure on the country’s foreign exchange reserves.
Energy and Petroleum Cabinet Secretary Opiyo Wandayi said on Sunday that the arrangement was introduced in 2023 when Kenya was facing an acute shortage of US dollars that threatened the supply of petroleum products and other essential imports.
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The defence comes amid renewed scrutiny of the arrangement following questions raised over the role of Kenyan oil marketing companies in supplying petroleum products to neighbouring countries.
In a statement, Wandayi said the administration of President William Ruto inherited a precarious fuel supply situation in September 2022, with retail stations operating with minimal or no stocks.
At the time, all petroleum imports were paid for in US dollars within five days of cargo receipt, with the refined petroleum import bill standing at about $500 million, equivalent to roughly 35 per cent of Kenya’s total import bill.
The shortage of dollars also affected other critical imports, including pharmaceuticals and fertiliser, while oil marketing companies were forced to source foreign currency from multiple banks.
According to Wandayi, this contributed to rapid depreciation of the Kenya shilling against the US dollar, with the exchange rate recording daily depreciation of up to three per cent.
“An urgent solution had to be sought to avoid economic collapse, which was a matter of when,” he said.
Kenya subsequently signed Master Framework Agreements on March 10, 2023, with Aramco Trading Fujairah FZE, Abu Dhabi National Oil Company Global Trading Ltd and Emirates National Oil Company (Singapore) Private Limited.
The agreements allowed the importation of refined petroleum products on 180-day credit terms.
Wandayi said the arrangement was intended to reduce immediate demand for dollars, support accumulation of foreign reserves by about $500 million a month and revive the interbank foreign exchange market.
The ministry said the three international oil companies selected local oil marketing companies as their Kenyan counterparties after vetting licensed firms.
The initial companies selected were Gulf Energy, Galana Energies and Oryx Energies Kenya, before One Petroleum, Asharami Synergy and BE Energy were subsequently nominated as the transaction became more established.
The government also defended the pricing structure, saying freight and premium charges had been renegotiated twice since the programme began.
For Super Petrol, the premium fell from $97.50 per metric tonne in 2023 to $90 in September that year and then to $84 in March 2025. Diesel premiums fell from $118 to $88 and subsequently $78, while Jet A1 declined from $114.25 to $111.75 and then $97 per metric tonne.
Wandayi said the premiums remained fixed even during the Middle East crisis, when spot-market offers reportedly reached as high as $400 per metric tonne.
“The G-to-G arrangement has therefore not only been a testimony of local solutions to local problems but has received wide recognition and adoption regionally,” he said.
The ministry said the arrangement also enabled petroleum imports to be paid for in Kenya shillings, backed by 180-day letters of credit, helping preserve and build foreign exchange reserves.
The government’s defence comes as Kenya continues to maintain relatively high pump prices. For the September 15-October 14 pricing cycle, EPRA retained Nairobi’s maximum prices at Sh214.03 per litre for Super Petrol, Sh217.86 for diesel and Sh191.38 for kerosene.
Wandayi said Kenya would continue working with regional trading partners to strengthen the Northern Corridor as a major route for petroleum supplies to East Africa and the wider Great Lakes region.
The ministry said the G-to-G arrangement had helped secure Kenya’s petroleum supply since its inception and contributed to strengthening the country’s position as a regional logistics hub.
