Kenya Settles Sh35.3B Credit Fuel Under Government-to-Government Deal

Kenya has settled Sh35.32 billion in credit fuel signed earlier this year under a G-to-G agreement with Saudi Arabia and the United Arab Emirates (UAE).

Treasury Cabinet Secretary, Njuguna Ndung’u, stated yesterday evening that the state had already paid three Letters of Credit (LCs) totaling Sh35.32 billion ($238.84 million) prior to maturity.

Ndung’u emphasized that the importation of Jet A1/Dual Purpose Kerosene, as well as the transit portion of super fuel and diesel imports, has helped stabilize the local currency versus the greenback.

It also stated that the Kenya Shillings used to pay for the local component of super petrol and diesel imports are credited to a separate escrow account and eventually converted into USD as the maturity date of each individual LC approaches.

The USD escrow account currently holds $1 billion (Sh147.9 billion), while the Kenya Shillings escrow account currently holds Sh115 billion, enabling prompt and seamless payment of all maturing LCs, according to Treasury.

The Government of Kenya entered into Master Framework Agreements (MFAs) for the supply of petroleum products with Aramco Trading Fujairah FZE (Aramco), Abu Dhabi National Oil Company (ADNOC), Global Trading Ltd., and Emirates National Oil Company (Singapore) Private Limited (ENOC) on March 10, 2023.

“The G-to-G arrangement has eliminated spot purchases for the USD by about 100 Oil Marketing Companies which previously created speculative pressure in the spot market,” Ndung’u said.

“The G-to-G does not therefore in any way expose the country to exchange rate volatility or depreciation, but rather protects the economy from such negative effects.”