Gov't clarifies terms on G-to-G fuel deal after claims of dubious supply to Uganda

Energy Cabinet Secretary Opiyo Wandayi said in a statement on Sunday that the arrangement was inked to stop a severe US dollar shortage in 2022 that threatened to crash the economy and drain the country's foreign exchange reserves.

"At the time, all imports of refined petroleum products were paid for in US Dollars within a short period of 5 days after cargo receipt. The total import bill on account of refined petroleum products amounted to US Dollars 500 million, being about 35% of the total import bill," the statement read in part.

"Like many frontier countries, Kenya experienced acute scarcity of US Dollars complicating supply of refined petroleum products among other critical imports such as pharmaceuticals and fertilizers."

To alleviate the dollar liquidity challenges, Kenya then brokered an importation deal in 2023 with with Aramco Trading Fujairah FZE (Aramco), Abu Dhabi National Oil Company (ADNOC) Global Trading Ltd and Emirates National Oil Company (Singapore) Private Limited (ENOC) to supply refined petroleum products on extended credit terms of 180 days.

CS Wandayi said that the International Oil Companies (IOCs) then opted to appoint licensed counterparties in Kenya for local supply logistics which the government provided a list of all Oil Marketing Companies (OMCs) for vetting. 

He intimated that Gulf Energy Limited, Galana Energies Limited and Oryx Energies Kenya Limited were initially selected and more OMCs were onboarded.

"As the arrangement progressed, the transaction was de-risked leading to higher confidence by the IOCs and subsequent nomination of more counterparties who are: One Petroleum Limited, Asharami Synergy Limited and BE Energy Limited," Wandayi added.

Freight costs for the supply of Super Petrol was USD 97.50 (Ksh.12,609) per metric ton USD 118 (Ksh.15,260) per metric ton of Diesel while that of Jet A1 was US Dollar 114.25 (Ksh.14,775) per metric ton. 

The prices eased due to the market easening in September 2023, and  freight for Super Petrol was set at USD 90 (Ksh11639) per metric ton, Diesel at USD 88 (Ksh.11,380) per metric ton and Jet A1 at US Dollar 111.75 (Ksh.11,452) per metric. 

"A further renegotiation happened in March 2025 where the supply of Super Petrol was agreed at US Dollar 84 per metric ton, Diesel at US Dollar 78 per metric ton and Jet A1 at US Dollar 97 per metric ton," he added, asserting that the premiums have remained fixed since.

He lauded the importation deal, saying the country’s forex reserves have been preserved as the US Dollar - Kenya Shilling exchange rate has been stabilized.

This comes amid a fresh controversy on the deal after Uganda's President Yoweri Museveni revealed that a Kenyan Senator alerted him that Uganda was procuring petroleum products at exorbitant rates through middlemen in Kenya, forcing him to end the arrangement.

Speaking during the groundbreaking ceremony for a 320-million-litre petroleum storage terminal in Uganda on September 17, President Museveni said he was unaware that Uganda was sourcing petroleum through Kenyan intermediaries until the Senator raised the issue.

“The Republic of Uganda was buying petroleum products through middlemen in Kenya. Can you imagine that? And the person who woke me up first was a senator from Kenya,” Museveni said.

He said that Uganda was paying a premium of $118 per metric tonne for diesel under the previous arrangement, compared with $83 under its current arrangement with Vitol and Uganda National Oil Company (UNOC).

For petrol, the premium fell from $97.50 to $61.50 per metric tonne, while that of aviation fuel fell from $114.25 to $79.25, according to the figures cited by Museveni and Uganda's Permanent Secretary for Energy Irene Batebe.