Energy and Petroleum Cabinet Secretary David Chirchir announced the new deal ahead of the the review of fuel prices by the Energy and Petroleum Regulatory Authority that is scheduled for 14 day of every month.
Inside Kenya's deal with world-largest oil company ahead of fuel price review
Kenya has signed a deal with Saudi Arabia and Dubai to start importing fuel through a government-to-government credit system.
Energy CS Davis Chirchir and Chairperson of Ruto's Council of Economic Advisors David Ndii during a press briefing on March 13, 2023
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Under the deal, Saudi Aramco will supply diesel, while the Abu Dhabi National Oil Company will supply super.
Saudi Aramco, which is controlled by the Saudi government, is the world's largest oil firm, with significant operations in Asia, Europe, and North America.
Energy CS Davis Chirchir speaking during a press briefing on March 13, 2023
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This system will allow oil marketing companies to buy petroleum products in Kenyan shillings through a credit system for a period of six months.
Easing pressure on the US dollar
The deal signed between Kenya and the two countries aims to ease pressure on the local currency and ensure that fuel retails at lower prices.
Chirchir explained that the products will be paid in Kenyan shillings, rather than in US dollars, which will help relieve the pressure on the dollar.
This will ensure that dollars are available for other industries such as manufacturing and food security, which rely on imports or exports.
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Kenya has been spending approximately $500 million every month to import fuel, which has been straining the demand for the greenback.
The CS said that government had involved oil marketing companies in the new deal and all stakeholders were in support.
A few days before the deal was signed, OMCs protested that a local firm was nominated by the ministry will import fuel and other marketers forced to buy for the local market and transit to neighbouring countries.
Fuel pump
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Fuel prices in Kenya have remained unchanged since December 2022, after EPRA maintained the pricing formula for January and February.
A litre of super petrol has been retailing at Sh177.30 in Nairobi and diesel at Sh162 per litre.
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