Kenya’s energy sector is facing potential legal and financial repercussions following the cancellation of fuel import contracts that fell outside the government-to-government (G-to-G) supply framework. The dispute centers on agreements signed in March 2026 with private oil marketers, including Oryx Energies Kenya, which has formally rejected the termination and signaled possible legal action.
The contracts in question involved the importation of 96,000 metric tonnes of super petrol by Oryx Energies, structured in two consignments. The first shipment of 36,000 tonnes arrived at the Port of Mombasa on April 1, while the second consignment of 60,000 tonnes was scheduled for April 10. However, the Ministry of Energy moved to cancel the agreement on March 31, less than 24 hours before the initial delivery.
The government further directed that the fuel would not be admitted into infrastructure operated by the Kenya Pipeline Company, effectively blocking distribution within the domestic market. In response, Oryx Energies maintained that the agreement was based on a documented procurement process and constituted a binding contract. The firm indicated that the abrupt cancellation exposed it to operational and financial risks linked to supplier commitments.
Parallel to this, another importer, One Petroleum, had also been contracted to supply emergency fuel volumes. The firm confirmed participation in a competitive bidding process initiated by the Ministry of Energy on March 18, aimed at averting a projected supply shortfall. Both companies were part of a broader arrangement that included Gulf Energy, with the intent of supplementing national reserves amid concerns of an impending stockout.
The cancellation appears to be linked to a policy shift reinforcing reliance on the G-to-G framework established with Gulf suppliers Saudi Aramco, Abu Dhabi National Oil Company, and Emirates National Oil Company. Authorities indicated that imports outside this structure were inconsistent with current procurement guidelines.
Pricing differentials have also emerged as a central issue. One Petroleum’s consignment was priced at approximately Sh198,000 per metric tonne, translating to a total cost of about Sh11.8 billion for 60,000 tonnes. This was estimated to be Sh3.4 billion higher than comparable imports under the G-to-G arrangement. Authorities projected that such cost variations could have increased pump prices by at least Sh14 per litre during the April–May pricing cycle.
Beyond pricing concerns, regulatory compliance has been questioned. Investigations suggested that some imported fuel may have exceeded permissible thresholds for sulphur, manganese, and benzene, as defined by national standards. These findings contributed to enforcement actions by the Directorate of Criminal Investigations, which led to the arrest of several senior officials, including former Energy Principal Secretary Mohamed Liban and regulators from the Energy and Petroleum Regulatory Authority.
Following the cancellation, logistical adjustments were observed. Both vessels carrying Oryx Energies’ consignments were redirected to Tanzania’s Tanga Port, indicating a potential diversion strategy as the firm evaluates its legal and commercial options.
The dispute highlights broader structural tensions within Kenya’s fuel procurement system. While the G-to-G framework offers benefits such as 180-day credit terms and reduced foreign exchange pressure, deviations from the model particularly during supply shocks introduce legal ambiguity and governance risks.
In summary, the cancellation of these contracts underscores the delicate balance between policy consistency, market flexibility, and legal enforceability. The outcome of the dispute could have lasting implications for investor confidence, procurement practices, and the stability of Kenya’s fuel supply chain.
