NAIROBI, Kenya- The government has defended its controversial Government-to-Government fuel import arrangement, saying it prevented supply disruptions, eased pressure on the US dollar and stabilised the Kenya shilling.
Energy and Petroleum Cabinet Secretary Opiyo Wandayi said the arrangement was introduced in response to severe foreign currency shortages and declining petroleum stocks after President William Ruto assumed office in September 2022.
The ministry issued the statement following renewed public debate over the fuel deal and the involvement of local oil marketing companies.
According to Wandayi, Kenya was spending about US$500 million every month on refined petroleum imports, representing approximately 35 per cent of the country’s total import bill.
Oil marketing companies were required to pay for fuel in US dollars within five days of receiving cargo, forcing them to seek foreign currency from several banks.
The ministry said the demand contributed to rapid depreciation of the shilling and forced the companies to enter expensive currency-swap arrangements.
“A meeting of the leadership with banks and OMCs laid bare the situation, bringing the realisation that the country was at a tipping point,” Wandayi said.
Kenya signed agreements with three Gulf suppliers
On March 10, 2023, Kenya signed Master Framework Agreements with Aramco Trading Fujairah, Abu Dhabi National Oil Company Global Trading and Emirates National Oil Company Singapore.
The three suppliers agreed to deliver refined petroleum products on credit terms of 180 days.
Wandayi said the extended payment period was intended to reduce monthly demand for approximately US$500 million, allow foreign exchange reserves to grow and restore activity in the interbank currency market.
The arrangement allows fuel supplied to the Kenyan market to be paid for in shillings through letters of credit lasting 180 days.
The number of banks issuing the letters of credit has since expanded from KCB Bank to include MCB, I&M Bank, Diamond Trust Bank, Stanbic, United Bank for Africa and Equity Bank.
Government denies choosing local companies
The ministry also addressed questions over the selection of local companies handling the fuel.
Wandayi said the international suppliers were required either to establish Kenyan subsidiaries or appoint locally licensed companies to manage logistics.
The suppliers chose the second option and initially selected Gulf Energy, Galana Energies and Oryx Energies Kenya after receiving a list of licensed oil marketing companies from the government.
One Petroleum, Asharami Synergy and BE Energy were later added as the suppliers gained confidence in the arrangement.
“The choice of the counterparty was non-negotiable,” Wandayi said, adding that government interference in the selection could have prompted the international suppliers to abandon the deal.
Fuel premiums renegotiated twice
When the arrangement began, the negotiated freight and premium stood at US$97.50 per metric tonne for super petrol, US$118 for diesel and US$114.25 for Jet A1.
The rates were renegotiated in September 2023, reducing the figures to US$90 for petrol, US$88 for diesel and US$111.75 for jet fuel.
A further negotiation in March 2025 lowered the premiums to US$84 for petrol, US$78 for diesel and US$97 for Jet A1.
Wandayi said the rates remained fixed even when spot-market premiums rose to as high as US$400 per metric tonne during the Middle East crisis.
He maintained that the arrangement had secured consistent fuel supplies, preserved foreign exchange reserves and strengthened Kenya’s position as a regional petroleum logistics hub through the Northern Corridor.
