The government has defended its government-to-government (G-to-G) arrangement for importing refined petroleum products, saying the deal was introduced to address a severe shortage of US dollars that threatened fuel supplies and wider economic stability in 2022.
In a statement issued on Sunday, September 20, 2026, Energy and Petroleum Cabinet Secretary Opiyo Wandayi said the arrangement was designed to cushion the country from the effects of foreign exchange shortages that had placed the supply of fuel and other critical imports under severe pressure.
The Ministry said that when President William Ruto’s administration took office on September 13, 2022, Kenya was facing serious security-of-supply challenges, with fuel stations operating with minimal or no stocks.
At the time, importers were required to pay for refined petroleum products in US dollars within five days of receiving cargo.
According to the ministry, refined petroleum imports accounted for about $500 million of the country’s import bill, equivalent to approximately 35 per cent of the total.
The dollar shortage also affected other critical imports, including pharmaceuticals and fertilisers, the ministry said. Oil marketing companies were forced to source dollars from multiple banks, creating additional demand and contributing to rapid movements in the exchange rate.
The ministry said the situation prompted discussions between the Government, banks and oil marketing companies, leading to the adoption of the G-to-G arrangement as an emergency response.
180-day credit arrangement
On March 10, 2023, the government signed Master Framework Agreements with Aramco Trading Fujairah FZE, Abu Dhabi National Oil Company (ADNOC), Global Trading Ltd and Emirates National Oil Company (Singapore) Private Limited (ENOC).
The agreements provided for the supply of refined petroleum products on 180-day credit terms.
The ministry said the extended payment period was intended to reduce immediate demand for dollars and allow Kenya to build foreign exchange reserves.
Under the arrangement, the government expected to ease dollar demand by about $500 million a month, while also helping revive the interbank foreign exchange market and reduce speculative activity.
The ministry said the arrangement enables payment for refined petroleum products in Kenya shillings, backed by a 180-day letter of credit.
It said the system has helped preserve and build the country’s foreign exchange reserves while contributing to stability in the Kenya shilling-US dollar exchange rate.
The number of banks issuing the letters of credit has since expanded from KCB Bank to include MCB, I&M Bank, DTB, Stanbic, UBA and Equity Bank.
Oil companies selected counterparties
The government also explained how local oil marketing companies were selected to handle logistics under the arrangement.
According to the ministry, the international oil companies were required either to establish subsidiaries in Kenya or appoint licensed local counterparts to handle logistics.
The international suppliers opted for the second arrangement.
The ministry said the government provided the international oil companies with a list of licensed oil marketing companies for vetting, but did not dictate which companies they should select.
Initially, Gulf Energy Limited, Galana Energies Limited and Oryx Energies Kenya Limited were selected as counterparties.
As confidence in the arrangement grew, three additional companies were nominated: One Petroleum Limited, Asharami Synergy Limited and BE Energy Limited.
The ministry said the choice of counterparties was considered important because of the high value of the transactions and the performance risks involved.
Government cites lower premiums
The government also highlighted changes in the freight and premium costs attached to imported petroleum products since the G-to-G arrangement began.
When the programme started, the negotiated freight and premium was $97.50 per metric tonne for Super Petrol, $118 for Diesel and $114.25 for Jet A1.
The ministry said the premiums were renegotiated in September 2023 as international market conditions eased.
The revised rates were $90 per metric tonne for Super Petrol, $88 for Diesel and $111.75 for Jet A1.
A further renegotiation in March 2025 reduced the rates to $84 per metric tonne for Super Petrol, $78 for Diesel and $97 for Jet A1.
The ministry said the premiums have remained fixed even during the Middle East crisis, when spot-market offers rose to as high as $400 per metric tonne.
It attributed the continued security of supply to the participation of major international petroleum refiners and traders and their geographic proximity to Kenya.
Government says deal strengthened regional role
The Ministry said the G-to-G arrangement has also contributed to Kenya’s position as a regional petroleum logistics hub.
It described the arrangement as an example of a local response to a domestic economic challenge and said it had received regional recognition and adoption.
Wandayi said the Government would continue working with trading partners to strengthen the Northern Corridor as a major route for transporting refined petroleum products to East Africa and the wider Great Lakes region.
The statement comes amid renewed public attention to the G-to-G fuel importation framework and its implementation.
The Ministry maintained that the arrangement was introduced primarily to address the foreign exchange liquidity crisis facing Kenya in 2022 and to safeguard the country’s supply of refined petroleum products.
“Local solutions to local problems” was how Wandayi characterised the arrangement, saying the Government would continue supporting its trading partners and regional petroleum supply chains.
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