First State-State fuel import cargo arrives mid-AprilTuesday March 28 2023
Oryx Energies, Galana Oil and Gulf Energy will in the next two weeks deliver their first batch of fuel on a 180-day credit period under a government-backed deal with Saudi Arabia and the United Arab Emirates (UAE).
Gulf Energy will be importing two cargoes of diesel, three consignments of super and one shipment of jet fuel every month while Galana Oil and Oryx Energies will each ship two cargoes of diesel for nine months.
Kenya signed the deal with two Gulf nations for the supplies on credit in a bid to ease a crisis in the foreign exchange market given that oil shipments account for 28 percent of Kenya’s monthly imports.
Read: What Kenya deal to import fuel on credit means
Saudi Aramco, Emirates National Oil Corporation (Enoc) and the Abu Dhabi National Oil Corporation Global Trading (Adnoc) picked the three local oil marketers this month.
“The supplier has nominated Oryx Energies Limited and Galana Oil Limited as their counterparty; nominated oil marketing company to handle the importation logistics,” Petroleum Principal Secretary Mohamed Liban says in one of the three letters.
Gulf Energy will import between 250,000 tonnes and 350,000 tonnes every month and between 170,000 tonnes to 200,000 tonnes of diesel in the period. The company will also import 80,000 tonnes of jet fuel every month.
Galana Oil and Oryx Energies will ship diesel cargoes of between 160, 000 to 180, 000 tonnes every month.
Adnoc picked Gulf Energy to supply diesel and jet fuel while Enoc picked the Kenyan oil marketer to import super. Saudi Aramco picked Oryx and Galana.
The three firms will make the first payment to their Gulf counterparts in September under the deal meant to ease pressure on the forex demand and help prop the battered shilling.
Local oil marketers will pay the three importers in Kenyan shillings who will in turn pay the Gulf firms in dollars. The first payment to Enoc, Adnoc and Saudi Aramco will be made in September.
The shilling sank to a fresh low of 131.45 units against the greenback on Monday and the rates at which banks and the forex bureau sell the dollar are set to remain on the increase.
Fuel shipments account for 28 percent of Kenya’s import bill every month, making petroleum imports the single biggest driver of the dollar demand.
"The product will now be paid for in Kenyan shillings and this will ensure the dollar is available for other sectors of the economy," Energy Cabinet Secretary Davies Chirchir said this month.
Other importers are also struggling to access dollars in a market where manufacturers have repeatedly raised the alarm over the scarcity of the US currency.
The first shipments of the fuel are expected to arrive at the Port of Mombasa between April 8th and 12th, two days before the review of monthly pump prices for the period to May 14th.
Read: Kenya will import UAE oil on credit to ease dollar woes
A litre of super is currently retailing at Sh179.3 in Nairobi -- the highest price since Kenya started regulating fuel prices -- but diesel and kerosene prices remained unchanged for the third month in a row at Sh162 and Sh145.94 per litre respectively.
Kenyans are battling runaway inflation that rose to 9.2 percent last month from 9.0 percent in January— the first rise since October last year.
Pump prices are key determinants of the country’s inflation rate because the Kenyan economy is diesel driven.