The agreement between the governments of Saudi Arabia and the United Arab Emirates for the provision of fuel has been extended by the government for an additional year.
After the government successfully renegotiated the freight and premium cost with the Gulf suppliers, the new agreement may provide Kenyans with respite at the pump.
The current agreement, which runs out in December, hasn’t been able to control pump prices or stop the shilling’s further depreciation, leaving the already overburdened public vulnerable to more shocks.
The Kenyan government has decided to prolong the government-to-government oil importing agreement after much debate in the Cabinet over whether or not to do so.
The new agreement made with Saudi Aramco, Emirates National Oil Corporation, and Abu Dhabi National Oil Corporation will now last through December 2024.
The government successfully renegotiated the freight and premium costs under the new agreement, resulting in a decrease in the cost of diesel arriving in Kenya from Ksh. 118 to Ksh. 88, petrol from Ksh. 97.5 per freight to Ksh. 90, and kerosine from Ksh. 140 to Ksh. 111.7.
While this will result in cheaper petroleum, other factors, such as the price of crude oil globally and currency exchange rates, will have a significant impact.
The current agreement between the government and the three Gulf Oil companies, which was promoted as an immediate and simple solution to Kenya’s expensive fuel, has fallen short of expectations.