Kenya to exit G to G oil deal, Months after Raila called it a scam.
Kenya to exit G to G oil deal with Saudi Months after Raila called it a scam: President William Ruto is expected the government to government oil deal with select Saudi Arabia companies in December this year after admitting that the agreement was creating distortions in the foreign exchange market.
Treasury cited that the controversial G2G deal had gone sideways as it failed to stabilise the exchange rate in favour of the Kenyan currency
The G to G deal was brokered between Kenya’s Ministry of Energy and Saudi Aramco, Abu Dhabi National Oil Corporation Global Trading (ADNOC) and Emirate’s National Oil Company (NOC).
The report read,”The government intends to exit the oil import arrangement, as we are aware of the distortions it has created in the foreign exchange (FX) market, the accompanying increase in rollover risk of the private sector financing facilities supporting it and remain committed to the private market solutions in the energy market,”
“We commit that all FX (foreign exchange) conversions done as part of the oil scheme will be done at market rates.”
The G to G oil deal had been put in place of open tendering system that allowed oil marketers to be paid upon five days of delivery. However, This created unnecessary pressure on the foreign exchange market.
Notably, The average monthly import volumes failed to attain the monthly minimums agreed under the arrangement.
The report read,”This was due to lower demand from our domestic market as well as from the regional reexports markets,”
“The initial agreement was extended for another twelve months to December 2024 with more favourable costing terms,” they added.
This comes months after Raila called the deal a scandal in waiting.
Raila stated,”It is shrouded in deep secrecy. To date, only two documents have been made public; that is the Master Framework Agreement with petroleum trading entities and the Open Tender System modified agreement with marketers,”
”Nobody knows how Gulf Energy, Galana Oil Kenya Ltd, and Oryx Energies Kenya Limited got nominated to handle local logistics. But the hand-picked distributors are selling oil to us at almost twice the price from bulk suppliers,” he added.