CS Chirchir Clarifies Government-to-Government Oil Deal Amid Opposition Criticism
NAIROBI, Kenya — Energy and Petroleum Cabinet Secretary Davis Chirchir has dismissed claims by opposition leader Raila Odinga that the government-to-government (G-to-G) oil deal is a scheme to inflate fuel prices for the benefit of shadowy state actors. Speaking to newsrooms, Chirchir explained that the arrangement arose after local Oil Marketing Companies (OMCs) struggled to access petroleum due to USD liquidity constraints and unpaid government subsidies.
Chirchir outlined that the Kenya Kwanza administration initially issued a tender for international oil companies (IOCs) to supply petroleum on 180-day deferred payment terms. After bidders failed to meet requirements, the government negotiated directly with state-owned companies, signing Memoranda of Understanding (MoUs) with Saudi Arabia’s Aramco and the United Arab Emirates’ ADNOC and ENOC. These IOCs nominated local counterparties—Gulf Energy, Galana Energies, and Oryx Energies Kenya—to manage logistics in Kenya. Pricing is stipulated under the Master Framework Agreement.
The CS emphasized that the deal aims to address forex liquidity issues and safeguard petroleum supply for Kenya and neighboring countries. Responding to concerns about high fuel prices, Chirchir explained that the Energy and Petroleum Regulatory Authority (EPRA) calculates costs based on cargo volumes and delivery prices at the Port of Mombasa, noting that September 2023 prices were the highest in 12 months. He added that differences in regional pricing methodologies, not government manipulation, account for disparities with Tanzania. The Northern Corridor remains the primary route for petroleum supply to Uganda and surrounding regions, with transit volumes unchanged.