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Kenyans hoping for cheaper cooking gas will have to wait longer after the government confirmed that a highly anticipated deal with a Saudi Arabian firm collapsed, delaying plans to expand supply and lower prices.
Energy Cabinet Secretary Opiyo Wandayi told the Senate Energy Committee that negotiations with Saudi Aramco failed, affecting efforts to boost Kenya’s liquefied petroleum gas (LPG) infrastructure.
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Appearing before the committee chaired by Siaya Senator Oburu Odinga, Wandayi explained that the proposed Memorandum of Understanding (MoU) between the Kenyan government and Aramco Trading Fujairah FZE, part of Saudi Arabia’s Oil Sustainability Programme (OSP), was never signed due to disagreements over key terms.
“The intended Memorandum of Understanding… was not executed as expected because the parties could not reach an amicable agreement,” Wandayi told senators.
The collapse means the OSP, which was expected to fund the distribution of about 8.4 million LPG cylinders, will not proceed as initially planned.
Wandayi revealed that the proposed $20 million (Sh2.5 billion) financing from Saudi Arabia came with strict conditions, including demands for exclusive supply rights for LPG—a condition the government found unacceptable.
“The $20 million package included serious conditionalities, one of which was exclusive supply of LPGs, which we could not agree to. Moreover, the funds would have been disbursed in multiple tranches, which was impractical,” he explained.
The government has now abandoned the deal in favor of more feasible options. This follows concerns raised by Elgeyo Marakwet Senator Kisang, who noted that during a visit to Saudi Arabia, Aramco officials said Kenya had refused to sign a letter of authorisation needed for the project to proceed.
“They were ready to supply the infrastructure, but we declined to sign. Perhaps we need to explain why,” Kisang said.
In response, Wandayi said the ministry is turning to private investors to rescue the LPG expansion programme. Requests for proposals have been issued, and four local firms have been identified to participate in cylinder manufacturing to boost domestic capacity.
He added that Parliament’s recent approval of an increased Petroleum Development Levy—from 40 cents to Sh5.40—would provide crucial funding to support LPG infrastructure, including import and storage facilities.
The collapse of the Saudi-backed deal is a setback to President William Ruto’s plan to make clean cooking energy more affordable. Since 2024, Kenya has been negotiating for a floating LPG storage and processing facility to be stationed off the Port of Mombasa.
Kenya Pipeline Company CEO Joe Sang said the floating facility would have handled up to 30,000 tonnes of LPG, serving as temporary storage and bottling while a permanent onshore plant is constructed. The project was central to stabilising supply, controlling prices, and fulfilling a 2023 pledge to reduce the cost of a 6kg gas cylinder.
With the Saudi financing now off the table, the government faces a longer and more complex path to providing affordable cooking gas.
Wandayi reassured that despite the setback, the State remains committed to developing the LPG sector through private partnerships, particularly in import and storage infrastructure.
“We will continue to work productively with private entities to develop the LPG sector and expand the necessary infrastructure,” he said.
