Kenya’s government-to-government (G-G) oil import deal is operating smoothly despite claims to the contrary, the president’s top economic advisor said Thursday.
“The G-G is working like a charm,” David Ndii, chairperson of President William Ruto’s Council of Economic Advisors, said in a series of tweets. “In fact, we are improving on it all the time.”
The comments came after Narok Senator Ledama Ole Kina warned Kenyans to prepare for higher fuel prices in the next pricing review. Speculation has swirled that the G-G agreement between Kenya and unnamed state-owned oil companies has faced challenges.
But Ndii asserted the oil import arrangement is “not a public procurement” but rather “a framework agreement that facilitates extended credit terms” to benefit both the oil exporters and Kenyan companies.
The advisor also dismissed “distortions” that paying for oil imports in shillings rather than dollars is part of the deal. “Its the domestic OMCs to pay for their products in shillings solving two problems (a) supply disruptions due to dollar shortage and (b) exchange loss exposure” under the previous multiple exchange rate system, he tweeted.
According to Ndii, the new import process was developed in consultation with the domestic oil marketing companies to respond to the industry’s pleas for a solution to its crisis.
He claimed the G-G agreement has reduced opportunities for “commissions and kickbacks” as well as profiteering from contraband oil imports. powerful individuals previously imported contraband oil outside official channels “for huge profits,” Ndii alleged.
“In fact contraband cargoes brought in by powerful people were a big problem for the OTS as they’d jump the discharge queue, clog storage causing huge demurrage charges,” one tweet said.
The senior economist suggested the critical reports on the G-G deal are likely “paid for propaganda” by those who lost out under the new system. “You know these ones even take money in the toilets,” he tweeted.
Uganda has announced plans to end its reliance on fuel imports from Kenya by having its state-owned oil company directly import and supply petroleum products.
The Uganda National Oil Company (UNOC) will now be responsible for sourcing and supplying fuel to domestic retailers under a new law approved by the Ugandan government.
Energy Minister Ruth Nankabirwa Ssentamu said in a statement that the amendments to the nation’s Petroleum Supply Act aim to “improve security of supply of petroleum products for the Country” and “contribute to the reduction of the pump prices by eliminating unwarranted transactions in the supply chain.”
Currently, over 90% of Uganda’s fuel is imported through Kenya’s port in Mombasa, with Ugandan companies getting allocations through affiliated marketers in Kenya. However, recent changes to Kenya’s fuel import system led to higher costs and supply uncertainties for Uganda, prompting the shift to direct imports by UNOC.
