Inside Kenya’s G-to-G fuel deal: Credit terms, pump-price formula and audit questions

In March 2023, Kenya signed master framework agreements with Saudi Aramco Trading Fujairah, Abu Dhabi National Oil Company Global Trading and Emirates National Oil Company Singapore.

The government was facing a shortage of US dollars, and fuel imports were a major source of demand for foreign exchange.

Treasury said at the time that the petroleum import bill was about US$500 million a month and accounted for roughly 35 per cent of the country's total import bill.

Under the government-to-government, or G-to-G, arrangement, the three suppliers would provide refined petroleum products on 180-day credit terms, backed by letters of credit.

The model was intended to reduce the need for oil marketers to purchase large quantities of dollars immediately after cargoes arrived, helping smooth foreign-exchange demand and reduce pressure on the shilling.

The agreement did not mean that Kenya stopped buying fuel from international markets.

It changed the contractual and financing arrangements under which key petroleum products were imported.

Who actually supplies the fuel?

The international suppliers chose to work with licensed Kenyan oil-marketing companies to handle local logistics rather than establish subsidiaries for the entire supply chain.

According to the Energy Ministry’s September 20, 2026 explanation, the first nominated local counterparties were Gulf Energy, Galana Energies and Oryx Energies Kenya.

One Petroleum, Asharami Synergy and BE Energy were later added.

The ministry says it provided a list of licensed marketers for the international suppliers to vet.

It maintains that the suppliers selected their Kenyan counterparties, rather than the government directly appointing them.

This structure became contentious after Uganda’s President Yoweri Museveni questioned the use of intermediaries in petroleum supplies transiting through Kenya.

Ugandan officials compared the premiums under their own supply arrangement with figures used in Kenya’s G-to-G system.

Kenya’s Energy Ministry defended the arrangement, saying the original objective was to deal with dollar scarcity and protect fuel supply.

It did not present the Uganda comparison as a direct like-for-like assessment of the two procurement systems.

What are the credit terms?

The core arrangement uses a 180-day letter of credit.

In simplified terms, the financing gives buyers time before the bank-backed payment falls due, instead of requiring the full foreign-currency outlay immediately on delivery.

Kenya’s official explanation says payments for fuel supplied to the domestic market are made in shillings and backed by the letters of credit, with dollars sourced for settlement as maturity approaches.

The arrangement is therefore designed to spread foreign-exchange demand over time rather than eliminate it.

It also creates financing costs.

Those costs, together with handling, storage and transport expenses, form part of the regulated fuel-price calculation.

The arrangement was initially designed to relieve severe foreign-exchange pressure.

It was not a guarantee that petrol, diesel or kerosene would always become cheaper.

How EPRA sets pump prices

The Energy and Petroleum Regulatory Authority sets maximum monthly pump prices using the Petroleum Pricing Regulations, 2022.

At the wholesale level, the formula incorporates the weighted average landed cost of imported fuel discharged in Mombasa during the relevant pricing window - from the 10th day of the previous month to the 9th day of the pricing month.

It then adds approved costs such as jetty handling, storage, primary transport, allowable losses, inventory financing, wholesale margins and taxes.

The retail price adds the cost of moving fuel from secondary storage depots to service stations, the approved retail margins and applicable taxes, including VAT.

The weighted-average landed cost is calculated from cargoes entering through the regulated import arrangements.

Consequently, international product prices, freight, exchange rates and cargo timing can all affect a monthly price review.

The audit questions

The Motorists Association of Kenya has called for a forensic audit of the G-to-G arrangement, seeking disclosure of the intermediaries involved, commissions, contracts, pricing and the beneficiaries of the system.

It has also called for an independent review of the EPRA formula and the verification of costs that feed into pump prices.

These are demands for scrutiny, not proof that wrongdoing has occurred.

As of October 15, no publicly confirmed finding from an independent forensic audit had established that the G-to-G contracts were corrupt or that the approved pricing formula had been unlawfully manipulated.

The central questions are whether the credit arrangement delivered the intended foreign-exchange benefits, whether supplier premiums and freight costs remain competitive, and whether all the costs included in regulated prices are properly supported.

The government says it renegotiated the freight and premium terms in September 2023 and March 2025, reducing the charges and holding them at the later levels despite international market volatility.

An independent review could test those claims against invoices, cargo documents, contracts, bank charges and pricing calculations.