Govt Breaks Silence on Kenya’s G-to-G Oil Deal After Fresh Controversy

In a statement dated September 20, Cabinet Secretary for Energy and Petroleum Opiyo Wandayi said the arrangement was conceived as an emergency intervention to address acute US dollar shortages that had affected the importation of refined petroleum products and other critical commodities.

Wandayi explained that the deal was introduced when Kenya faced a severe foreign exchange crisis that threatened fuel supplies and the economy.

“Our attention has been drawn to media reports in the last 2 days on the Government-to-Government importation of refined petroleum products commonly known as the G-to-G arrangement, which is a well-intentioned arrangement for the country. The objective of the arrangement was to cushion the country from the negative effects of US Dollar liquidity that had almost ground our economy to a halt in 2022,” read the statement in part.

Why Kenya Introduced the G-to-G Oil Deal

According to Wandayi, when President William Ruto’s administration took office on September 13, 2022, Kenya faced serious challenges securing refined petroleum products, with some retail stations operating with minimal or no stock.

At the time, petroleum imports required payment in US dollars within five days of receiving the cargo. Wandayi said the petroleum sector required approximately US$500 million every month, equivalent to about 35 percent of the country’s total import bill.

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The government said the resulting dollar demand put pressure on the Kenya shilling and the foreign-exchange market.

To address the problem, Kenya signed Master Framework Agreements on March 10, 2023, with Saudi Aramco Trading Fujairah FZE, Abu Dhabi National Oil Company (ADNOC) Global Trading Ltd and Emirates National Oil Company (ENOC).

The agreements introduced a 180-day credit period, allowing payment for imported petroleum products to be deferred. Earlier on, Treasury said the arrangement was intended to reduce immediate demand for foreign exchange, support reserves, and ease exchange-rate volatility.

Why the Government involved Middlemen in Oil Importation

Wandayi said the Gulf suppliers had two options under Kenya’s licensing framework: establish their own subsidiaries to manage the entire supply chain or appoint licensed Kenyan counterparties to undertake local logistics.

The international companies chose the second option.

The government initially gave the suppliers a list of licensed OMCs for vetting. Wandayi said the first companies selected were Gulf Energy Limited, Galana Energies Limited and Oryx Energies Kenya Limited.

As confidence in the arrangement increased, One Petroleum Limited, Asharami Synergy Limited and BE Energy Limited were nominated as additional counterparties.

Government Details Changes in Fuel Import Premiums

Wandayi said the original freight and premium charges were negotiated when international petroleum markets were priced high.

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The initial rates were US$97.50 per metric tonne for Super Petrol, US$118 for Diesel and US$114.25 for Jet A-1.

The government renegotiated the rates in September 2023, reducing them to US$90 for Super Petrol, US$88 for Diesel and US$111.75 for Jet A-1.

Further renegotiation in March 2025 reduced them to US$84 for Super Petrol, US$78 for Diesel and US$97 for Jet A-1.

the lower rates formed part of an extension of the G-to-G arrangement, which was extended to supply Kenya until early 2028. 158 petroleum cargoes had been imported under the arrangement between April 2023 and May 2025.

In March, two local firms were allowed to bring in petrol outside the G-to-G framework at a premium substantially above the US$84-per-tonne rate applicable under the arrangement.

Wandayi said the G-to-G system continues to support petroleum payments in Kenya shillings through 180-day letters of credit, with several Kenyan banks now participating in financing the imports.