CS Wandayi says G-to-G Fuel Deal Eased Dollar Shortages, Secured Kenya’s Fuel Supply

NAIROBI, Kenya Sep 21 – Energy and Petroleum Cabinet Secretary J. Opiyo Wandayi has defended Kenya’s government-to-government (G-to-G) fuel importation arrangement, saying the programme helped address severe US dollar shortages and safeguard the country’s petroleum 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.

He was responding to media reports and criticism surrounding the G-to-G fuel importation framework, insisting that the arrangement was designed as a response to an economic and fuel supply crisis facing the country in 2022.

According to Wandayi, when President William Ruto’s administration assumed office in September 2022, oil marketing companies were required to settle petroleum import bills in US dollars within five days of cargo receipt.

The monthly import bill for refined petroleum products stood at about US$500 million, equivalent to roughly 35 per cent of Kenya’s total import bill at the time.

Wandayi said the high demand for dollars by oil marketing companies contributed to pressure on the Kenya shilling, while companies were forced to source foreign currency from multiple banks to meet their import obligations.

He said the situation created additional pressure in the foreign exchange market and threatened the continuity of fuel supplies.

The government subsequently entered into Master Framework Agreements with Aramco Trading Fujairah FZE, ADNOC Global Trading Ltd and Emirates National Oil Company (ENOC) on March 10, 2023.

The agreements provided for the importation of refined petroleum products on 180-day credit terms.

Wandayi said the extended payment period was intended to reduce immediate demand for US dollars and enable Kenya to accumulate additional foreign exchange reserves.

The government estimated that the arrangement could ease dollar demand by about US$500 million per month, while also supporting the interbank foreign exchange market.

“The main objective of the G-to-G arrangement was to alleviate US Dollar liquidity challenges,” Wandayi said in a statement issued on Sunday.

He added that the arrangement was also intended to reduce speculative activity that had contributed to volatility in the foreign exchange market.

Wandayi also defended the selection of local oil marketing companies that participate in the G-to-G arrangement.

He said the international oil companies were required to either establish subsidiaries in Kenya or appoint licensed local counterparts to handle logistics and distribution.

According to the CS, the government provided the international suppliers with a list of licensed oil marketing companies for vetting.

The initial local counterparts selected were Gulf Energy Limited, Galana Energies Limited and Oryx Energies Kenya Limited.

As the programme progressed, Wandayi said additional companies were nominated, including One Petroleum Limited, Asharami Synergy Limited and BE Energy Limited.

He argued that the selection of counterparties was ultimately a commercial decision by the international oil companies, given the value of the transactions and associated performance risks.

Wandayi further cited renegotiations of the freight and premium charges as evidence of changes made to the arrangement as international market conditions evolved.

At the start of the programme, the negotiated premiums were US$97.50 per metric tonne for Super Petrol, US$118 for Diesel and US$114.25 for Jet A1.

The government renegotiated the premiums in September 2023, reducing them to US$90 for Super Petrol, US$88 for Diesel and US$111.75 for Jet A1.

A further renegotiation in March 2025 reduced the premiums to US$84 per metric tonne for Super Petrol, US$78 for Diesel and US$97 for Jet A1.

Wandayi said the revised premiums have remained fixed despite volatility in the international market.

He noted that spot-market offers rose as high as US$400 per metric tonne during the height of the Middle East crisis.

The CS said the arrangement has also helped secure Kenya’s petroleum supply by working with major international refiners and traders with geographic proximity to the country.

Under the framework, petroleum products for the local market are paid for in Kenya shillings and backed by 180-day letters of credit.

Wandayi said this has helped preserve Kenya’s foreign exchange reserves while reducing pressure arising from immediate dollar payments for fuel imports.

He said the number of banks issuing the letters of credit has also expanded from KCB to include MCB, I&M Bank, DTB, Stanbic, UBA and Equity Bank.

The CS described the arrangement as a locally driven response to Kenya’s foreign exchange and fuel supply challenges.

He said the government would continue working with regional trading partners to strengthen the Northern Corridor as a major route for petroleum supplies to East Africa and the wider Great Lakes region.