The Kenyan Government headed by President William Ruto has extended its deal with three Saudi Arabia companies for one year, Bloomberg reports.
In a sit-down on Monday, Energy and Petroleum Regulatory Authority (EPRA) Director-General Daniel Kiptoo noted that the new agreement allows the three companies to supply the oil products on credit until December 2024.
The three companies are Saudi Aramco, Abu Dhabi National Oil Corporation Global Trading (ADNOC) and Emirate’s National Oil Company (NOC).
Since the deal came into force, the first payment amounting to Ksh12 billion is due on September 25, 2023. Another payment of Ksh60 billion will also be maturing by the end of October.
The new deal is likely to attract the attention of the other oil marketers who had been locked out of bidding for the oil until January 2024.
When the deal was signed in March, it was expected to run for nine months with only three local oil firms, Gulf Energies, Oryx and Galana Oil Kenya Limited, included in the deal.
That meant that three companies were given tender by the government to import the oil for the period, then sell to other marketers.
Other 96 oil firms that wanted a slice of the deal then filed a suit arguing that they were being edged out of the market.
Ruto, however, praised the deal at the time as good and would save the country Ksh68 billion every month as well as easing pressure on the dollar.
“As a country, we can buy fuel using local currency and from this month of April, all our fuel marketers will be able to use the shilling in buying our fuel products,” the President stated in April.
Without the deal, Kenya would have been required to raise Ksh74 billion (USD500 million) in dollars every month to pay for the imported oil.
Hiked Oil Prices
Kenyans have, however, been skeptical of whether the deal achieved its intended goal of guaranteeing oil supply at an affordable rate.
After taking the oath of office, Ruto removed oil subsidies started by his predecessor, raising the price of fuel.
In July, He also passed a new Finance Act increasing the Value Added Tax (VAT) on fuel from eight to 16 per cent, a figure that saw the price of oil trade at Ksh194 per litre of petrol.
In its latest review, EPRA increased the prices of the three key products which now retail at Ksh211.64, Diesel (Ksh200.99), and Kerosene (ksh202.61) per litre.