Govt Pays Ksh 35.2 Billion in Govt to Govt Fuel Deal
The Treasury has already met its obligations to the government-to-government agreement between Kenya and Gulf countries by paying Ksh35,2 billion ($238,8 million).
According to documents shared by the Treasury, the payment is part of the first maturing Letters of Credit (LCs) of the agreement between the Kenyan government and several Gulf oil companies, including Saudi Aramco, Emirates National Oil Corporation (Enoc), and Abu Dhabi National Oil Corporation Global Trading (Adnoc).
In addition, the documents indicate that the hard escrow account contains Ksh146.7 billion ($1 billion).
In the interim, Ksh115 billion is being held in an escrow account until the fuel supply procedure is complete.
The Treasury stated that these are the earliest maturing LCs under the G-to-G arrangement to date.
Treasury reported that the LCs, with a total value of USD 238,842,710.12, have been resolved (paid before maturity) without distorting the foreign exchange market.
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The payment is a component of a March fuel agreement between the Kenyan government and three Gulf corporations.
The contract payment was postponed until September so that importers and merchants could avoid foreign exchange pressure.
In the energy deal, payments will be made to Saudi Aramco of Saudi Arabia, Emirates National Energy Company Group (ENOC) of Dubai, and Abu Dhabi National Oil Company (ADNOC).
When the agreement was reached, President Ruto vowed that it would enable the government to investigate options that would relieve pressure on the Kenyan shilling.
“Fuel marketers and everyone in that space will be able to purchase fuel products in Kenyan shillings, relieving the strain on our dollar.” Approximately one month from now, the dollar will decline dramatically. In April, President Ruto predicted that the exchange rate would decrease to 120.
Under the terms of the oil agreement, the companies will provide Kenya with diesel, super gasoline, and jet fuel on credit.
The Kenyan government extended its oil deal with the governments of Saudi Arabia and the United Arab Emirates for another 12 months with the initial deal due to expire in December.
Govt Pays Ksh 35.2 Billion in Govt to Govt Fuel Deal
