Kenya has inked a deal with Saudi Arabia that will see the country ship in fuel at lower rates in a bid to lower pump prices and ease the burden on consumers.
National Oil Corporation of Kenya will from August start shipping in fuel from the State-owned Saudi Aramco at lower prices than the global costs of crude.
According to the Chief Executive Officer Leparan ole Morintat Nock, under the deal, Kenya will import 30 per cent of the country’s monthly petroleum requirements from August which is likely to help pull down pump prices.
“We already signed the MoU and the next phase is negotiating the contract terms, we are waiting on them as from last Sunday,” he told a local daily.
Saudi Aramco will finance the shipments or provide the product with an extended credit period and Nock will pay within 60 and 90 days.
The imports will also be used to provide strategic stocks for the country and cushion the country from a fuel shortage due to disruptions globally.
Saudi Aramco will arrange the financing of the commodity with financiers in Dubai in a deal that will unlock cheaper credit to Nock for buying and shipping in Super, diesel, and kerosene.
Fuel prices have hit a new high this month despite billions sunk in the stabilisation fund after the Energy and Petroleum Regulatory Authority (Epra) increased pump prices by Sh9 per litre.
This pushed the cost of super and diesel to Sh159.12 and Sh140, respectively in Nairobi — the highest in Kenya’s history. Kerosene prices also went up by a similar margin and will now retail at Sh127 in Nairobi
The prices have set the stage for further increases in the cost of living at a time inflation has hit a 27-month high.
Kenya’s economy is diesel driven and this means that manufacturers, farmers, and service providers will pass the increased fuel cost to consumers, which will further hit households and businesses.
