NAIROBI, Kenya — Kenya has rejected a proposed Sh2.5 billion liquefied petroleum gas (LPG) deal with Saudi Aramco, citing conditions that would have granted the firm exclusive rights to supply cooking gas to the country.
Energy Cabinet Secretary Opiyo Wandayi told the Senate Energy Committee that the government walked away from the negotiations after the parties failed to agree on terms contained in the proposed memorandum of understanding.
“The intended Memorandum of Understanding was not executed as expected, given that parties were not able to amicably agree on the terms. The so-called Sh2.5 billion was coming with serious conditionalities, one of which was exclusive supply of LPGs, which we found untenable,” Wandayi said.
The financing was part of a Saudi-backed Oil Sustainability Programme aimed at supporting distribution of about 8.4 million cooking gas cylinders and expanding Kenya’s LPG import and storage capacity.
The collapse of the deal is expected to delay plans to lower cooking gas prices, a key pledge by the Kenya Kwanza administration to expand access to clean household energy.
Since 2024, Kenya has been in talks with Saudi Arabia to secure a floating LPG storage and processing facility to be stationed off the Port of Mombasa. The proposed offshore facility was expected to support interim storage and bottling as the country develops a permanent onshore terminal.
Joe Sang, Managing Director of Kenya Pipeline Company, previously said the offshore facility would handle up to 30,000 tonnes of LPG.
Wandayi told lawmakers the ministry will now shift focus to private sector participation to finance LPG infrastructure. He said requests for proposals had been issued and four local firms identified to support cylinder manufacturing.
“We will continue to engage very productively with private entities in the development of this LPG sector, particularly infrastructure for import and storage,” he said.
Despite the setback, Wandayi assured the country has adequate petroleum stocks, noting that supply agreements with Gulf-based energy companies remain in place.
“We have stock of all petroleum products to last us until April, and we have agreements with Gulf international energy companies that have ensured we have enough supplies,” he said.
