The Lower Eastern Times Opening The Third Eye
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The Cabinet has approved the continuation of the Government-to-Government (G-to-G) arrangement for importing refined petroleum products.
According to the Cabinet, this arrangement has alleviated the monthly demand for US dollars for petroleum imports, helping stabilize the shilling-dollar exchange rate at Sh129, down from a high of Sh166. It has also led to a reduction in fuel prices, lowering petrol costs from Sh217 per litre to Sh177.
Chaired by President William Ruto, the Cabinet noted that the arrangement guarantees a steady supply of refined petroleum by enabling payments in Kenya shillings, which were previously estimated at $500 million monthly.
The Government-to-Government oil deal, initially set to expire in December 2024, was extended for another 12 months, including negotiations for better pricing terms.
The G-G scheme involves issuing support letters from the government to domestic Oil Marketing Companies (OMCs), which benefit various stakeholders, including banks, credit insurers, lenders, and institutions providing financing or hedging for OMCs. The imported fuel is paid for on six-month credit, backed by commercial letters of credit from domestic and international banks.
Petroleum imports account for 30% of Kenya’s total dollar requirements.
Prior to this deal, payments for imports under the Open Tender System (OTS) were made in US dollars, purchased on the spot market within a short period after receiving the products.
Additionally, the Cabinet approved the procurement of Liquefied Petroleum Gas (LPG), Heavy Fuel Oil, and bitumen through a centrally coordinated bulk procurement system.
President Ruto expressed gratitude to the Cabinet for their efforts throughout the year, highlighting progress in food production, housing, labor mobility, and tourism. He emphasized that the focus was on transformation, not populism, and on leadership, not politics. “It is not about some people, but all the people of Kenya,” he stated.
