The government imported petroleum products worth Sh1.6 trillion ($12.34 billion) from the Gulf since the start of the Government to Government (G-to-G) deal in 2023, the Petroleum Ministry has revealed.
Energy and Petroleum Cabinet Secretary Opiyo Wandayi said 170 cargoes have successfully been delivered under the G-to-G arrangement, assuring security of supply for the country and the region.
“The total value of Letters of Credit (LCs) issued is valued at $12.34 billion(Sh1.6 trillion) out of which LCs worth $10.91 billion (Sh1.41 trillion) have been settled with no default,” Mr Wandayi said.
“Total quantity delivered through the 170 cargoes of 14,669,534.96 metric tonnes was delivered by the Supplier and the Nominated Oil Marketing Companies.”
Appearing before the National Assembly’s Energy Committee to provide the status of the G-to-G arrangement with three Gulf oil majors, Mr Wandayi government has been able to negotiate for lower freight and premiums under the G-G arrangement.
Energy Cabinet Secretary Opiyo Wandayi.
Photo credit: Bonface Bogita | Nation Media Group
Kenya entered into a G-to-G arrangement with Saudi Aramco, Emirates National Oil Company and Abu Dhabi National Oil Company to supply fuel on credit.
Implemented in March 2023, the G-to-G importation framework was designed to ease pressure on foreign exchange reserves and stabilise fuel supply.
The agreement allows for the importation of petroleum, diesel, and jet fuel under a deferred payment plan of 180 days, coordinated centrally by the ministry.
Mr Wandayi said prior to the G-to-G arrangement, the cost of the petroleum product was paid for in United States Dollars (USD) in the market, which had put strain on Government of Kenya’s foreign exchange reserves causing tightened liquidity of USD the market which had a direct impact on the availability of refined petroleum products therefore causing security of supply challenges.
“Further, the tightened liquidity also caused the Kenya Shilling (Ksh) to depreciate against the USD,” Mr Wandayi said.
“The Ksh-USD exchange rate is a critical variable in the determination of petroleum pump prices and any Ksh depreciation is directly transferred to the end consumer in the form of increased retail prices.”
He said to ease the aforementioned pressure, the government, on March 10, 2023, entered into Master Framework Agreements (MFAs) for the supply of refined petroleum products under a Government-to-Government arrangement (the G-to-G arrangement) on extended credit terms.
The G-to-G, which came into effect on April 1, 2023, was meant to alleviate US Dollar (USD) liquidity challenges by ensuring accumulation of additional foreign reserves to the tune of $500 million per month, to reduce demand and free USD to other sectors of the economy.
The G-to-G was also aimed at reviving the interbank market while at the same time reducing speculative tendencies in the foreign exchange market – to stem depreciation of Kenya shilling, and ensure foreign exchange rate stability which would support economic recovery and result to slow growth of public debt to GDP over the medium term while supporting efforts towards fiscal consolidation and ultimately economic growth.
“Under the G-G arrangement, the government negotiated for preferential terms including competitive premium, and 180 days deferred payment terms secured by a 180-day standby Letter of Credit,” he said.
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The committee, chaired by Nakuru Town East MP David Gikaria, however, put Mr Wandayi to task to explain the sudden increase in pump prices despite the government having renewed the G-to-G importation deal that was meant to cushion Kenyans from higher fuel prices.
The Energy and Petroleum Regulatory Authority (Epra) last Monday announced sharp increases in fuel prices in its monthly review, citing higher international landing costs of petroleum products and exchange rate pressures.
Epra said the maximum pump prices for the period running from July 15 to August 14, 2025, will rise by an average of Sh9 per litre for petrol, diesel and kerosene.
The committee session chairperson, Tom Odege, demanded to know why consumers continue to shoulder high fuel prices when the G-to-G oil import deal was to stabilise the persistent spike in pump prices.
“Kenyans are watching you today, your technical team can cite freight and premium figures, but what people care about is why prices remain high. We expect you to defend their interests,” Mr Odege said.
Mr Wandayi attributed the rise in pump prices to a 6–9 per cent increase in international oil prices between May and June 2025.
At least five top banks are now part of the government-to-government oil importation deal.
Photo credit: File Photo | Nation Media Group
He said the price changes translated to an increase of Sh5.10 per litre for petrol, Sh5.90 for diesel, and Sh5.74 for kerosene.
Mr Wandayi said the G-to-G deal had helped lower the fuel prices, but blamed the enactment of numerous taxes on petroleum products for the high cost of fuel.
“So, it is not this Parliament that determines the price of food, there are so many things we can get into because there are issues of taxes,” he said.
Mr Wandayi said Kenya achieved lower freight and premium charges of 84 per metric tonne (Sh10,899) for diesel $78 (Sh10,121) for petrol, and $97 (Sh12,587) for Jet fuel against Tanzania’s diesel, $135 (Sh17,518) and $190 for jet fuel for the month of July.
“To further clarify, I did not in any way imply that Parliament or the National Assembly, for that matter, plays a role in fixing petroleum product prices. No!” Mr Wandayi said.
But I did say that those taxes and levies that are imposed on petroleum products have to be approved by Parliaments.”
The committee wondered why border counties' residents were crossing into neighbouring countries to buy cheaper fuel when the G-to-G deal was to provide cheaper fuel to Kenyans.
“It is not Parliament that fixes fuel prices, and we’ve never been involved in pricing discussions. The Energy Committee should be part of such decisions since we represent the people,” Julius Mawathe, the committee vice chairperson and Embakasi South MP, said.
The committee said the Ministry of Energy should have lowered pump prices given that global oil prices had dropped between June and July.
