The Ministry of Energy allowed two local oil companies to import petrol at a cost that is three times higher than the prices agreed under the G-to-G deal between Kenya and three Gulf-based oil suppliers.
According to a report that appeared in local business newspaper, Business Daily, the two local companies are One Petroleum and Oryx Energies. They were allowed to ship in a combine 120 tonnes of petrol in early March. This has raised fears that with the high cost of importation, Kenyans could be in for higher fuel prices from April 15.
According to reports by the newspaper, each of the two oil companies imported 60 tonnes of petrol. One Petroleum quoted a premium of $290 per tonne which was equivalent to Sh37,691.3. This was three times the $84 (equivalent to Sh10,917.48) quote for a similar quantity of fuel under the G-to-G deal.
The G-to-G deal involves Gulf firms Saudi Aramco, Emirates National Oil Co, and Abu Dhabi National Oil Co. It has been running through three main oil companies, Galana Energies, Gulf Energy, and Oryx Energies. These companies have been distributing fuel on behalf of the three Gulf oil companies since March 2023.
According to the Ministry of Energy and Petroleum, Kenya has extended the G-to-G deal with the Gulf oil firms to 2028. The three firms will continue to supply gasoline, diesel, kerosene and jet fuel under the 180-day credit arrangement until early 2028.
READ MORE: 3 Gulf oil firms pocket Sh1.5 trillion from G-to-G Kenya fuel deal in 18 months
According to the report in the newspaper, the cost of petrol might rise by as much as Sh19 per litre. The newspaper quoted an industry source saying that this price hike will cover the premium margins that have been demanded by the importers.
“We are looking at an increase of at least Sh19 per litre on account of the premiums alone. Then we also add the global benchmark prices of fuel for the month of March [which are known as Platts] which are higher than those from the month of February. The effect is going to be huge unless the government goes for a significant subsidy,” the source was quoted.
Fuel prices have been rising globally following the war conflicting that is going on in Iran. The conflict has resulted in Iran closing the Strait of Hormuz, which is a critical water channel used for the movement of oil exports.
Following the closure, oil exporters from Gulf including Saudi Aramco – which is part of the G-to-G deal – have been using the Sikka Port in India, the Port of Antwerp-Bruges in Belgium and the ports situated along the Red Sea for the transportation of oil to markets such as Kenya.
According to the report, about 239.1 million litres of petrol are set to be loaded onto two vessels at the Port of Antwerp-Bruges in Belgium. The vessels shall sail towards Kenya via the Red Sea – Mediterranean route and dock at the Port of Mombasa at between April 16 and April 27.
Another 81.15 million litres of dual-purpose kerose and 75.6 million litres of diesel shall be loaded onto vessels at the Sikka Port in India. These vessels will be expected to dock at the Port of Mombasa between April 12 and April 21.
