Government extends oil deal with Saudi and UAE firms

Government extends oil deal with Saudi and UAE firms

Government extends oil deal with Saudi and UAE firms

According to Bloomberg, the Kenyan government, led by President William Ruto, has extended its agreement with three Saudi Arabian corporations for another year. Energy and Petroleum Regulatory Authority (EPRA) Director-General Daniel Kiptoo made the observation during a meeting on Monday that the new arrangement permits the three businesses to deliver the oil products on credit through December 2024.

The three businesses are Saudi Aramco, Emirate’s National Oil Company (NOC),  and Abu Dhabi National Oil Corporation Global Trading (ADNOC). The first payment, totaling Ksh 12 billion, is now due on September 25, 2023, as the  agreement went into effect. By the end of October, a second payment of Ksh 60 billion will also be due.

The new agreement is probably going to catch the eye of the other oil marketers who had been prohibited from placing bids until January 2024.The agreement, which was inked in March, was only intended to cover the three local energy companies Gulf Energies, Oryx, and Galana energy Kenya Limited for a period of nine months.

In order to import the oil for the time period and sell it to other marketers, the government issued a tender to three companies.Then, 96 other oil companies that wanted a piece of the deal filed a lawsuit, claiming they were being priced out of the market.Ruto, though, applauded the agreement at the time, saying that it was positive and would save the nation Ksh68 billion each month while also lowering the demand for the dollar.The President declared in April that “as a nation, we can purchase fuel using local money, and beginning this month of April, all of our fuel marketers will be able to purchase our fuel products using the shilling.”

In the absence of the agreement, Kenya would have needed to generate Ksh74 billion (USD500 million) each month to cover the cost of the imported oil. Increased Oil PricesHowever, Kenyans have expressed skepticism regarding whether the agreement met its original objective of ensuring an inexpensive oil supply.Ruto abolished the oil subsidies put in place by his predecessor after taking the oath of office, which increased the cost of petrol.

The three important items now retail at Ksh211.64, Ksh200.99, and Ksh202.61 per litre, according to EPRA’s most recent review.

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