Raila labels Gov't-to-Gov't oil deal a major scam that is driving up fuel prices

He said in a media briefing on Thursday from the Jaramogi Oginga Odinga Foundation that the deal signed and kept secret was driving up the cost of fuel in the country while benefiting shadowy government officials.

Raila claimed in his statement that Kenya did not sign any agreement with the UAE or Saudi Arabia and that the agreement was signed between the Energy Ministry and state-owned companies in the Middle East.

He stated that the Kenya Kwanza government then characterized the transaction as a government-to-government deal in order to exempt three Kenyan companies from paying 30% corporate tax.

"There was no G-to-G. Kenya did not sign any contracts with Saudi Arabia or the UAE. Only the Ministry of Energy and Petroleum signed a deal with state-owned petroleum companies in the Middle East," he told the media. 

"Why Ruto chose to characterize the deal as a G-to-G is the first red flag that points to mischief in this deal."

According to Raila, despite the deal being marketed as a panacea for Kenya's worsening fuel crisis, prices had not dropped, and the Kenyan shilling has continued to fall in value against the dollar.

"When Ruto initiated this deal, the US-dollar to Kenya-shilling exchange rate was Ksh.132. Today, six months later, it is Ksh.159 to the dollar," he added. 

"The cost of fuel shot up significantly after the deal. Why have things moved from bad to worse since the deal?"

The opposition leader also questioned how Gulf Energy, Galana Oil Kenya Ltd, and Oryx Energies Kenya Limited were chosen to handle local logistics, accusing the "handpicked distributors" of selling oil at nearly twice the price of bulk suppliers.

"We know that in August this year, four months after the deal, the government allowed Oryx Energies to sell oil at prices that had been inflated by 17 per cent," Raila said in the media statement.

"In the Ruto deal, Oryx is the supplier of diesel to other oil marketing companies (OMCs) in the country. The excuse was the delay in discharging fuel at the jetty," 

Raila claims that the Energy Ministry's decision to switch the billing month in order to let the oil companies quote higher prices has resulted in an increase in fuel costs across the nation. 

"For instance, cargo that was bought in July when the price was low is allowed to quote higher August prices and pass the burden to the consumer," he said. 

Raila also spoke about the Ugandan government's decision to seek an alternative for their petroleum products, after accusing Kenyan middlemen of hiking prices. 

According to Raila, the middlemen referred to by President Museveni are government officials who have inflated prices by up to 59 per cent. 

"The change of route by landlocked trading partners will force a number of Kenyan Oil Marketing companies and logistics firms to close shop," he added. 

"Of course, this leads to job losses, loss of foreign exchange, loss of revenue for the country as a result of KPC losing transit share."

The opposition leader has called for the government to revoke the "government-to-government deal in favour of the previous model that featured a competitive procurement process" in order to handle the festering problem, which he believes might only get worse.

"The open tender system was efficient, accountable, and competitive and offered prices commensurate with the international pricing model," he said.

Additionally, he has insisted that Kenya's anti-graft agency EACC look into the terms of the agreement and the parties that stand to gain from it.

In addition, he has called for an additional investigation into the tax conformity of the three entities involved in the transaction. 

"The men and women who came up with this self-serving deal must be surcharged and sacked," he added. 

"EACC and the Directorate of Criminal Investigations must investigate the tax compliance status and pricing model of the three oil companies." 

Raila has also insisted that the government give a thorough overview of the implications Uganda's decision to seek a large portion of its petroleum needs through the Tanzanian Central Corridor will have on our nation, particularly with regard to the Kenya Pipeline Company's future.