ENERGY COMMITTEE PROBES MINISTRY ON THE GOVERNMENT-TO-GOVERNMENT FUEL IMPORTATION DEAL
The National Assembly Departmental Committee on Energy Chaired by Hon. (Eng). Vincent Musyoka held a meeting with the Cabinet Secretary and other senior officials of the Ministry of Energy and Petroleum to deliberate on a policy change regarding the importation of petroleum products. The proposed changes will convert the process from the current Open Tender System (OTS) to Government-to-Government arrangement.
In his remarks, Hon. (Eng). Musyoka stated that the Committee’s objective was to guarantee affordable access to petroleum products for Kenyans.
Making his presentation, the Cabinet Secretary Mr. Davis Chirchir informed the Committee that the Government, after a process of inviting bidders through the Ministry, settled on oil import suppliers set to supply petroleum products within a 6-month credit basis. “This Government-to-Government agreement replaces the current process of Open Tender System (OTS) reported to incur a monthly cost of approximately 500 million dollars”, said Mr. Chirchir.
He added that the agreement is constituted under the Petroleum (Importation) Regulations, 2023 (Legal Notice No. 3 of 2023). He went on to clarify that the purpose of the agreement is to ease the growing pressure on the demand for the dollar resulting from petroleum imports.
In addition, the CS stated that the Foreign Exchange reserves are under pressure since the dollar requirements by Oil Marketing Companies (OMC) account for 30% of Kenya’s total dollar requirements.
“The newly agreed-upon measures would enhance the country’s forex reserves, leading to a reduction in currency speculation and the revitalization of the inactive interbank market’, said Mr. Chirchir.
However, Members raised concerns about the Agreement. They sought clarity on the criteria for nominating the Oil Marketing Companies (OMC) by the suppliers, incorporation of the National Oil Corporation of Kenya (NOCK and who bears the currency risk given that local OMCs will pay the nominated OMC in Kenya Shilling.
In addition, Members wanted to know the current level of petroleum reserves in the country and the actions taken by the Ministry to guarantee a sufficient supply of the products in the economy.
In his response, Mr. Chirchir assured Members that Kenya has enough petroleum stock. He also stated that the ongoing transition would not have an impact on the current stock levels. According to the CS, Kenya is set to import petroleum products from the first week of April 2023.
Accompanying the Cabinet Secretary was the Principal Secretary of the State Department of Petroleum, Mr. Mohammed Liban, and the Director General, Energy and Petroleum Regulatory Authority (EPRA) Mr. Daniel Kiptoo Bargoria.