Kenya’s Minister for Energy and Petroleum, Davis Chirchir on Monday announced that the Kenyan government has signed an agreement with Saudi Aramco and Emirates National Oil Co. to supply petroleum products to Kenya. This is part of the government’s plan to nationalize oil imports.
According to the Minister, the tender issued by the government two weeks ago attracted bids from seven companies. The government has now signed a six-month credit-based deal with Saudi Aramco and Emirates National Oil Co. Under the agreement, Saudi Aramco will supply monthly consignments while Dubai-based Emirates National Oil Co. will supply three cargo consignments of Super every month for the next six months.
The newly signed deal will see the Kenyan government defer payment to suppliers by at least six months, which is a significant shift from the current arrangement. Currently, approximately $500 million is required every month to pay for cargo within a week of delivery.
The Kenyan government plans to start importing under the new system in the April-May supply round. This move is part of the government’s strategy to ease pressure on Kenya’s foreign reserves, which have recently fallen below the Central Bank’s statutory requirement of maintaining a minimum of four months’ worth of import cover.
In addition to the foreign reserves challenge, fuel marketers have reported inadequate access to US dollars to purchase fuel and access their stocks at the Kenya Pipeline Company (KPC) depots. This has caused fuel shortages in several petrol stations across the nation.
ALSO READ;
Fuel Firms Take Legal Action to Stop State UAE Oil Deal
Kenya Set to Import Fuel from UAE as Crisis Looms on Dollar Shortage
