CS Wandayi says G-to-G Fuel Deal Eased Dollar Shortages, Secured Kenya’s Fuel Supply
Wandayi said the arrangement was introduced in 2023 after Kenya faced an acute shortage of foreign currency that had threatened the importation of refined petroleum products and other essential commodities.
Kenya's Energy and Petroleum Cabinet Secretary, J. Opiyo Wandayi, defended the government-to-government (G-to-G) fuel importation arrangement, asserting it helped alleviate severe US dollar shortages and secure the nation's petroleum supply. Introduced in 2023, the program was implemented after Kenya experienced a critical shortage of foreign currency that threatened the importation of refined petroleum products and other essential goods.
Responding to media criticism, Wandayi explained the arrangement was a response to an economic and fuel supply crisis in 2022. Under the G-to-G arrangement, oil marketing companies in Kenya were required to pay for petroleum imports in US dollars within five days of receipt, leading to an estimated monthly demand of US$500 million, which accounted for 35% of Kenya's total import bill at the time.
This high demand for dollars put pressure on the Kenyan shilling and forced companies to seek foreign currency from multiple banks, creating additional strain on the foreign exchange market and threatening fuel supplies. In March 2023, the government signed Master Framework Agreements with Aramco Trading Fujairah FZE, ADNOC Global Trading Ltd, and Emirates National Oil Company (ENOC) to import refined petroleum products on 180-day credit terms.
Wandayi claimed the extended payment period reduced immediate dollar demand by an estimated US$500 million monthly and supported the interbank foreign exchange market. The CS also defended the selection of local oil marketing companies participating in the program, stating that international suppliers were required to establish subsidiaries in Kenya or appoint licensed local counterparts to manage logistics and distribution.
Wandayi cited renegotiations of freight and premium charges as evidence of adjustments made to the arrangement in response to evolving international market conditions. Premiums for Super Petrol, Diesel, and Jet A1 have been reduced from US$97.50, US$118, and US$114.25 per metric tonne to US$84, US$78, and US$97, respectively, despite market volatility.
The arrangement has ensured Kenya's petroleum supply by working with major international refiners and traders with proximity to the country, with letters of credit issued by Kenyan banks expanding from KCB to MCB, I&M Bank, DTB, Stanbic, UBA, and Equity Bank. Wandayi described the G-to-G arrangement as a locally driven response to Kenya's foreign exchange and fuel supply challenges, emphasizing the government's commitment to strengthening the Northern Corridor as a major route for petroleum supplies to East Africa and the Great Lakes region.
Written by urgent.news from Capital FM Kenya's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
