Energy and Petroleum Cabinet Secretary Opiyo Wandayi in Chepalungu Constituency, Bomet County, to launch REREC’s Last-Mile connectivity projects on September 16, 2026. [Courtesy]
The Government has defended the controversial Government-to-Government (G-to-G) arrangement for importing refined petroleum products, saying the deal was introduced to address a severe dollar shortage that threatened fuel supplies and wider economic stability.
In a statement issued on Sunday, Energy and Petroleum Cabinet Secretary Opiyo Wandayi said the arrangement was designed to cushion Kenya from the effects of the US dollar liquidity crisis that had placed the economy under severe pressure in 2022.
Wandayi said when President William Ruto’s administration assumed office on September 13, 2022, the country faced serious security-of-supply challenges, with some fuel stations operating with minimal or no stocks.
“On assumption of office on September 13, 2022, the administration of President William Ruot faced serious security of supply of refined petroleum products with retail stations across operating on minimal or no stocks,” Wandayi said.
At the time, oil imports were required to be paid for in US dollars within five days of cargo receipt, while refined petroleum products accounted for about Sh65 Billion of the country’s import bill, equivalent to roughly 35 per cent.
“Kenya experienced acute scarcity of US Dollars complicating supply of refined petroleum products among other critical imports such as pharmaceuticals and fertilizers,” the Ministry said.
According to the Government, oil marketing companies were forced to source dollars from several banks, creating additional demand and contributing to rapid depreciation of the Kenya shilling. Some companies also resorted to expensive currency swaps, which became unsustainable as the dollar shortage persisted.
The Government subsequently entered into Master Framework Agreements on March 10, 2023, with Aramco Trading Fujairah, Abu Dhabi National Oil Company Global Trading and Emirates National Oil Company Singapore for the supply of refined petroleum products on 180-day credit terms.
The Ministry said the arrangement was intended to ease immediate dollar demand and allow the country to accumulate additional foreign reserves estimated at Sh65 Billion per month.
It also sought to revive the interbank foreign exchange market and reduce speculative activity that had contributed to exchange-rate volatility.
The Government further defended the selection of local oil marketing companies as counterparties, saying the international oil companies were allowed to choose licensed Kenyan firms after vetting.
The initial companies selected were Gulf Energy, Galana Energies and Oryx Energies Kenya, before One Petroleum, Asharami Synergy and BE Energy were subsequently nominated.
On pricing, the Ministry said negotiated freight and premium charges had fallen since the arrangement began. Super Petrol, initially set at Sh12,675 per metric tonne, was renegotiated to Sh11,700 in September 2023 and Sh10,920 in March 2025.
Diesel fell from Sh15,340 to Sh11,440 and later Sh10,140, while Jet A1 declined from Sh14,852.50 to Sh12,610 per metric tonne.
The Government said the negotiated premiums remained fixed even during the Middle East crisis, when spot-market offers reportedly reached as high as Sh52,000 per metric tonne.
Wandayi said the arrangement also allows payment for petroleum products in Kenya shillings, backed by a 180-day letter of credit, helping preserve foreign-exchange reserves and support exchange-rate stability.
The Ministry said the number of banks issuing the letters of credit has expanded from KCB to include MCB, I&M Bank, DTB, Stanbic, UBA and Equity Bank.
It described G-to-G as a local solution to a local problem and said the arrangement had helped strengthen Kenya’s position as a regional petroleum logistics hub.
The statement comes as renewed public attention focuses on the structure and impact of the fuel-importation arrangement, with the Government seeking to explain its origins, pricing and claimed economic benefits.
Wandayi said the Government would continue supporting trading partners to strengthen the Northern Corridor as a major route for petroleum supplies to East Africa and the Great Lakes region.