CS Wandayi says G-to-G Fuel Deal Eased Dollar Shortages, Secured Kenya’s Fuel Supply

NAIROBI, Kenya Sep 21 – Energy and Petroleum Cabinet Secretary J. Opiyo Wandayi has defended Kenya’s government-to-government (G-to-G) fuel importation arrangement, saying the programme helped address severe US dollar shortages and safeguard the country’s petroleum supply. Wandayi said the arrangement was introduced in 2023 after Kenya faced an acute shortage of foreign currency that had threatened the importation of refined petroleum products and other essential commodities.

He was responding to media reports and criticism surrounding the G-to-G fuel importation framework, insisting that the arrangement was designed as a response to an economic and fuel supply crisis facing the country in 2022. According to Wandayi, when President William Ruto’s administration assumed office in September 2022, oil marketing companies were required to settle petroleum import bills in US dollars within five days of cargo receipt. The monthly import bill for refined petroleum products stood at about US$500 million, equivalent to roughly 35 per cent of Kenya’s total import bill at the time.

Wandayi said the high demand for dollars by oil marketing companies contributed to pressure on the Kenya shilling, while companies were forced to source foreign currency from multiple banks to meet their import obligations. He said the situation created additional pressure in the foreign exchange market and threatened the continuity of fuel supplies. The government subsequently entered into Master Framework Agreements with Aramco Trading Fujairah FZE, ADNOC Global Trading Ltd and Emirates National Oil Company (ENOC) on March 10, 2023.

The agreements provided for the importation of refined petroleum products on 180-day credit terms. Wandayi said the extended payment period was intended to reduce immediate demand for US dollars and enable Kenya to accumulate additional foreign exchange reserves. The government estimated that the arrangement could ease dollar demand by about US$500 million per month, while also supporting the interbank foreign exchange market.

“The main objective of the G-to-G arrangement was to alleviate US Dollar liquidity challenges,” Wandayi said in a statement issued on Sunday. He added that the arrangement was also intended to reduce speculative activity that had contributed to volatility in the foreign exchange market. Wandayi also defended the selection of local oil ma…