Foreign Oil Companies Bill Kenya a Staggering sh 578 Billion

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Monday, September 11, 2023 –Mega gulf oil companies that supplied Kenya with multimillion oil now wants to paid a staggering sh 578 billion.

This is as per the mouthwatering deal that was signed between the two nations Kenya, United Arab Emirates and Saudi Arabia government.

Media established that the first consignment of the fuel products delivered earlier this year is maturing this week, with the government expected to funnel the Ksh578 billion ($4 billion) to Saudi Aramco of Saudi Arabia, Emirates National Oil Company Group (ENOC) of Dubai, and the Abu Dhabi National Oil Company (ADNOC).

“Under the terms of the agreement, which has an initial duration of nine months (through the end of December 2023), the fuel is imported on 6-month credit, backed by commercial letters of credit (LCs) issued by domestic banks, and confirmed by international banks,” Government of Kenya announced early this year.

Locally, Kenya’s line of credit system requires Oil Market Companies (OMCs) to deposit the dollar proceeds from sales of jet fuel and region-bound fuels, as well as the shilling equivalent of domestically marketed diesel and gasoline, into escrow accounts with domestic banks within approximately 5 days of receiving fuel cargo.

“Based on April 2023 prices, the total obligation incurred is estimated at around $700 million (sh 101 billion) per month for a total of over US$ 4 billion (sh 578 billion) by September 2023,” read the document seen by sections of the media.

Kenya’s government has not yet confirmed whether the oil contract will be extended beyond its initial expiration date in December 2023. The Ministry of Energy indicated that it would return to the Open Tender System if the contract successfully alleviates the dollar crisis.