The controversy that surrounds the G-to-G fuel deal between the government of President William Ruto and Gulf countries has once again reared its ugly head.
This is after it emerged that despite the fuel having been claimed to be a cheaper option, Kenyan motorists have been overcharged Sh. 16.4 billion at the pump. This is equivalent to Sh. 2.70 per litre at the pump.
According to a report that was published by a local business newspaper, three local supplies in Kenya who include Gulf Energy and Galana Oil refused to pass on the benefits of the deal. Instead, they have been taking home disproportionately high returns over the average margins that were recorded during the previous open tender system.
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“For the open tender system, the average suppliers’ premium for January-February 2023 is Sh. 4.51 per litre. For the government-to-government mechanism, the average suppliers’ premium for June to July 2024 is Sh. 7.21 per litre or Sh. 2.70 per litre higher than the open tender system for the sampled months,” the daily quoted a research report by Channoil Consulting Limited and Kurrent Technologies Limited.
The G-to-G deal has been running through three main oil companies, Galana Energies, Gulf Energy, and Oryx Energies.
These companies have reportedly been distributing fuel on behalf of three oil companies owned by Saudi Aramco, Abu Dhabi Oil Company, and Emirates National Oil Company.
When the government initiated the deal, it blamed the Open Tender System (OTS) for creating persistent dollar shortages in the market. The government claimed that under the G-to-G deal, the Kenya shilling would appreciate against the US dollars to levels of between 115 and 120.
“The G to G arrangement came in to stabilize the macroeconomic environment by providing an extended credit period for petroleum imports – that is, 180 days compared to the initial 30 days – and this freed about 30 per cent of the country’s forex to other sectors of the economy,” the National Treasury states.