Kenya's G-to-G Fuel Import Deal Sparks Debate Over Dollar Pressure
The Kenyan government has defended its decision to enter into master framework agreements with three Middle Eastern companies to import refined petroleum products on 180-day credit terms. The arrangement, which began in March 2023, was designed to ease demand for US dollars and enable the country to accumulate additional foreign exchange reserves.
The Energy Cabinet Secretary, Opiyo Wandayi, stated that the government-to-government (G-to-G) fuel importation arrangement has helped protect fuel supplies, reduce pressure on foreign exchange reserves, and support stability in the Kenyan shilling. When President William Ruto's administration took office in September 2022, fuel stations were operating with minimal or no stocks, while oil marketers were required to pay for imported petroleum products in US dollars within five days of receiving cargo.
The government claims that since the introduction of the G-to-G arrangement, freight and premium charges have fallen. The premium for Super Petrol dropped from $97.50 (about Sh12,600) to $84 (about Sh10,860) per metric tonne, while diesel fell from $118 (about Sh15,260) to $78 (about Sh10,090). Jet A1 declined from $114.25 (about Sh14,770) to $97 (about Sh12,550).
The arrangement has also strengthened Kenya's position as a regional logistics hub, with the government seeking to make the Northern Corridor the preferred route for refined petroleum products to East Africa and the Great Lakes region.