)
Kenyans are set to enjoy cheaper fuel prices after a deal inked by Energy Cabinet Secretary Davis Chirchir during a trip to Dubai.
During the trip, Chirchir successfully negotiated a deal with three major Gulf oil companies to lower the cost of fuel supplied on credit, aiming to shield consumers from missing out on the global decline in fuel prices.
Chirchir however did not disclose the specific new premiums that would be charged for the remaining duration of the contract.
The state-backed deal, signed in April with Saudi Aramco, Emirates National Oil Corporation (Enoc), and Abu Dhabi National Oil Corporation Global Trading (Adnoc), was intended to alleviate pressure on foreign exchange demand and support the struggling shilling by deferring payments for six months.
)
)
)
Additionally, it allowed local companies to make payments to the three fuel importers in the local currency.
)
A pump attendant fills the tank of a car at a petrol station in September 4, 2018 in Nairobi as a 16 per cent VAT on petroleum products was decided and fuel distributors refused to collect stocks from depots. (Photo by SIMON MAINA/AFP via Getty Images)
READ: 30 Saudi companies worth Sh140 trillion plan investments in Kenya
Addressing the Parliamentary Committee on Energy, Chirchir said the suppliers were willing to bring down the premiums to allow Kenya to get competitive.
"We were fairly successful in pushing for the reduction of the freight and premium, and we will see improvement going forward," he said.
Despite the decline in global crude prices, which reached $75 per barrel this month, Kenya has been unable to benefit from the drop due to the fixed contract signed under the credit fuel import deal.
Chirchir did not confirm whether the new premiums would be reflected in the upcoming fuel price announcement.
As part of the negotiations, Saudi Aramco, Enoc, and Adnoc also agreed to remove the confirmation charge on letters of credit, which had increased the financing burden on the Kenyan government.
)
File image of boda boda operators queueing for fuel at a petrol station
READ: Kimani Ichung'wah defends VAT increase on fuel with comparison to Uganda & Tanzania
The Energy and Petroleum Regulatory Authority (EPRA) is expected to announce new fuel prices for the month of July on Friday 14.