Kenya has extended the importation of refined petroleum products under the Government-to-Government (G-to-G) deal arrangement with three Gulf firms, a move expected to relieve the pressure on the shilling and bolster Kenya’s economy.
The deal with Emirates National Oil Company, Saudi Aramco, and Abu Dhabi National Oil Company was signed in March last year and was expected to run from April to September 2023. However, after an evaluation of Kenya’s macroeconomic environment, the deal was extended further by 12 months to December this year.
Under the G-to-G arrangement, Kenya imports petroleum products and makes payments in Kenyan shillings instead of US dollars.
The government asserts that the oil import deal has been able to reduce pump prices while protecting the economy from exchange rate volatility.
“This arrangement has eased the monthly demand for US dollars for petroleum imports, establishing the shilling-dollar exchange rate at KSh129 from a high of KSh166 and reducing pump prices from KSh217 per liter of petrol to KSh177,” the Cabinet said after a meeting at State House on Tuesday.
The Cabinet also approved the procurement of bitumen, Heavy Fuel Oil, Liquefied Petroleum Gas (LPG), and Heavy Fuel Oil through a centrally coordinated bulk procurement system.
