Kenya has inked a deal with Saudi Arabia to import fuel at affordable prices which are lower than the current global prices.
Kenya strikes fuel deal with world's largest oil company
The deal is expected to lower the cost of fuel in Kenya
In the deal announced by the National Oil Corporation of Kenya, the country will start importing Saudi fuel in August.
“We already signed the MoU and the next phase is negotiating the contract terms, we are waiting on them as from last Sunday,” Nock Chief Executive Officer Leparan ole Morintat said.
“The plan is to start trials in August, for two months and see the impact of the exclusive prices that Saudi Aramco will be giving us. Then we will fully start in October,” he added.
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.
In the agreement that will allow Nock to obtain more affordable credit for the purchase and shipment of super, diesel, and kerosene, the oil company will organise the financing of the commodity with bankers in Dubai.
The current fuel prices have been blamed for the rising cost of living in Kenya.
As of June 2022, petrol costs Sh159.12 per litre, diesel Sh140 per litre and kerosene, Sh118.94 per litre according to the Energy and Petroleum Regulatory Authority.
Energy Cabinet Secretary Monica Juma revealed that the ministry disbursed more than Sh67 billion in fuel subsidies to cushion Kenyans from the high cost of living.
CS Juma who made the revelation on Thursday, June 17, said that the government projects by the end of this financial year, close to Sh84 billion will have been spent in an attempt to stabilize the erratic fuel prices.
However, Treasury CS Ukur Yatani has also said he will be withdrawing the fuel subsidy which was implemented to cushion motorists from rising global fuel prices.
The National Treasury has allocated Sh100 billion for the subsidy for the 2022/23 financial year but argues that it is not sustainable.
Without the fuel subsidy, fuel prices would have retailed at Sh184.68, Sh188.19 and Sh170.37 per litre of petrol, diesel and kerosene, respectively.
“However, fuel subsidies are inefficient and often lead to misallocation of resources and crowding out of public spending on productive sectors, resulting in unintended consequences such as disproportionately benefiting the well-off,” Treasury CS Ukur Yatani said on June 15.
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