The Government has selected five local banks to issue letters of credit of KES 614.89 billion for fuel importation from the United Arab Emirates over a nine-month period.
According to Business Daily, Kenya has selected KCB, NCBA, Absa Bank Kenya, Stanbic Bank, Co-op Bank, and Afreximbank.
This move is aimed at tackling the foreign exchange crisis in Kenya, and the government will choose oil marketers to enter into import deals with the UAE.
Based on the request, the Government of Kenya confirms that it has a consortium of banks that shall issue and confirm Letters of Credit to an upper limit of $4.8 billion (KES 614.89 billion).
Mohamed Liban – Energy and Petroleum Principal Secretary
According to the disclosures, 12 banks, including First Abu Dhabi Bank, Abu Dhabi Commercial Bank, Emirates NBD, Deutsche Bank, Mashreq, Mizuho, Natixis, and Afreximbank, have committed to honouring the letters of credit.
Such letters serve as evidence of a bank’s commitment on behalf of an importer and provide reassurance to the supplier of the goods. By transferring the risk from the buyer to the issuing bank, a letter of credit obliges the lender to pay even if the buyer becomes insolvent.
The purpose of the deal, which allows Kenya to import diesel, super, and jet fuel on a 180-day credit, and to support the shilling against the dollar.
Read Also: Kenya Set to Import Fuel from UAE as Crisis Looms on Dollar Shortage
