Revealed: How select oil importers shared more than Sh32 billion

MT Marlin Sardinia making her maiden call at the Port of Mombasa's Kipevu Oil Terminal (KOT II) in Mombasa County on Tuesday 18th June 2024. [Kelvin Karani, Standard] The controversial Government-to-Government (G-to-G) fuel import deal, touted as a way to ease dollar liquidity and stabilise the shilling, has seen billions of shillings disbursed to a select group of oil marketers. Documents from the Ministry of Energy and Petroleum reveal that Sh32,882,923,423.85 has been paid to various importers under the Petroleum Development Levy (PDL) stabilisation programme for the financial years 2023/2024 and 2024/2025. The G-to-G arrangement, which came into effect on April 1, 2023, was designed to address a severe US dollar shortage that had put pressure on Kenya's foreign exchange reserves and contributed to the depreciation of the shilling. Under this scheme, the Kenya Kwanza government negotiated extended credit terms of 180 days for refined petroleum products, a significant departure from the previous Open Tendering System (OTS) which operated on 30-day credit. Key Gulf players supplying the oil under this arrangement include the Saudi Arabia Public Investment Fund, Abu Dhabi National Oil Company, and Emirates National Oil Company. According to the ministry's response to the Departmental Committee on Energy of the National Assembly, 170 cargoes of petroleum products have been delivered, ensuring "security of supply for the country and the region." The total value of Letters of Credit issued for these imports stands at $12,343,923,435.10, with $10,909,174,324.51 already settled. The bulk of the stabilisation payments for 2023/2024 went to Gulf Energy, which received Sh14,321,552,344.88. Galana Energies followed with Sh4,653,963,149.80, and Oryx Energies received Sh218,556,295.69. The total stabilisation payments for 2023/2024 amounted to Sh19,194,071,790.37. For the ongoing 2024/2025, Gulf Energy continues to be the primary beneficiary, having received Sh9,466,158,810.37 so far. Galana Energies has been paid Sh1,853,726,323.90, One Petroleum received Sh998,367,729.45, Asharami Synergy Sh257,838,596.18, Oryx Energies Sh1,111,108,592.48, and Texas Energy received Sh1,651,581.10. The total for 2024/2025 to date is Sh13,688,851,633.48. Several key banks have been integrally involved in facilitating the G-to-G fuel imports through the issuance and settlement of Letters of Credit. The total value of LCs issued across all participating banks stands at $12,343,923,435.10, with $10,909,174,324.51 having been successfully settled to date without default. Among the major financiers, KCB leads with LCs issued valued at $7,152,509,764.26 and $6,405,872,575.66 settled. Other significant banking partners include DTB ($963,947,966.29 issued, $801,629,416.74 settled), I&M Bank ($1,100,227,800.00 issued, $1,054,941,466.62 settled), Stanbic Bank ($347,800,000.00 issued, $248,783,932.55 settled), Equity Bank ($406,647,904.55 issued, $360,298,457.44 settled), UBA ($94,250,000.00 issued, $94,220,796.08 settled), and MCB ($2,278,540,000.00 issued, $1,943,427,679.42 settled). The Ministry highlighted that the G-to-G arrangement has allowed Kenya to negotiate "preferential terms including competitive premium" and has been crucial in avoiding fuel stock-outs. Despite these efforts, pump prices have seen recent increases, attributed by the Ministry to rising international crude oil prices and the phased implementation of a Cost of Service Study in Supply of Petroleum Products (COSSOP 2023) recommendations, which adjust various margins and transport costs. The G-to-G arrangement, initially set to expire by the end of 2024 for committed volumes, has now been extended for an additional 24 months, pushing its expiration into the first quarter of 2028. This extension, approved by the Cabinet, underscores the Kenya Kwanza's government's continued reliance on the deal amid ongoing macroeconomic challenges.

Revealed: How select oil importers shared more than Sh32 billion

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