Amid high gas prices, Kenya inks deal with Saudi Arabia to import cheap fuel
The National Oil Corporation of Kenya (NOCK) has announced that the country has signed a memorandum of understanding (MoU) with Saudi Aramco – a Saudi Arabian Oil Company, to help import refined petroleum products.
Several towns in Kenya have been hit hard by an unprecedented fuel shortage, especially in gasoline which affects public transportation and the agricultural season in a number of states. This has led to an increase in fuel prices nationwide following an evaluation by the Energy and Petroleum Authority (EPRA).
According to NOCK CEO Leparan ole Morintat, the agreement with Saudi Armco will guarantee a regular supply of petroleum products at exclusively lower prices for vehicles and power plants across the country.
He pointed out that under the government-to-government deal, NOCK will be importing 30 per cent of the country’s monthly petroleum requirements. Saudi Armco will provide the products with an extended credit period, while NOCK will pay within 60 and 90 days.
“We already signed the MoU, and the next phase is negotiating the contract terms; we are waiting on them as from last Sunday,” Morintat told Business Daily.
“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.”
The ongoing fuel crisis in Kenya has seen traffic in parts of the capital, Nairobi, as desperate motorists joined snaking queues outside petrol stations, blocking major roads.
The cost of super gasoline in Nairobi has increased by 5.96 per cent to Ksh.159.12 per litre due to the rising cost of fuel; diesel and kerosene now cost Ksh.140 and Ksh.127.94, respectively, according to Citizen Digital.
The fuel subsidy, which covers Ksh.25.56 for super petrol consumers, Ksh.48.19 for diesel, and Ksh.42.43 for kerosene, will be wound up by the National Treasury, increasing the price even further.
Without the cover, the price of gasoline would be Ksh. 184.68 per litre, while the prices for diesel and kerosene would be Ksh. 188.19 and Ksh. 170.37, respectively.
According to Reuters, government officials have blamed the shortage on oil marketing companies, accusing them of hoarding supplies ahead of a price hike. Oil companies have also pointed to subsidy arrears owed to them by the state.