Govt Inks Deals With Saudi Arabia For Cheaper Fuel

Fridah Wangechi | 2 years ago
An attendant pumping fuel into a vehicle REUTERS

The burden that has been weighing heavily on Kenyans' shoulders is soon set to be alleviated, as the government has sealed a deal with Saudi Arabia to start shipping fuel at a subsidized price that is lower than global rates.

The state-owned National Oil Corporation of Kenya inked the deal with its Saudi counterpart Aramco to supply the country with refined fuel at a substantially lower cost than the global cost of crude oil.

In the memorandum of understanding signed by the two countries, Kenya will import 30 percent of the country’s monthly petroleum requirements from August in a trial that will run until October in a bid to gauge the impact of the new prices will have on the economy.

“We already signed the MoU and the next phase is negotiating the contract terms, we are waiting on them as from last Sunday,” Nock Chief Executive Officer Leparan ole Morintat told Business Daily publication.

“The plan is to start trials in August, for two months and see the impact of the exclusive prices that Saudi Aramco will be giving us. Then we will fully start in October,” he added.

The duration of the contract, backed by the Draft Petroleum (Importation) (Quota Allocations) Regulations, 2022, has not yet been made public but plans are in place to have Nock revamp its network across the country.

The Saudi Arabian corporation will fund the shipments through financiers in Dubai who will cater to buying and shipping of petroleum products and also provide credit extension periods that will allow Nock to pay within 60 and 90 days.

The imports will also be used to provide strategic stocks for the country in a bid to mitigate fuel shortage that has been experienced in the past owing to price disruptions globally.

This comes as a relief to Kenyan consumers who are coughing up to Kshs159.12 and Kshs 140 respectively for a litre of Super Petrol and Diesel. Kerosene retails for a record high price of Kshs 127.94 for a litre.

The high prices have been attributed to the effects of the Russia-Ukraine war that has led to the hike in price of the previous commodity.

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