Kenyan motorists could soon breathe a sigh of relief at the pump following a renewed import agreement with Gulf oil producers that lowers petroleum prices by up to 14% per tonne.
The revised deal, signed with three state-owned Gulf energy firms Saudi Aramco, Abu Dhabi National Oil Company (ADNOC), and Emirates National Oil Company (ENOC) extends Kenya’s fuel import arrangement through 2027 and marks a strategic win for the East African nation amid global economic pressures.
Under the revised terms, Kenya will now import diesel at $78 (approx. Sh10,081) per tonne, down from $88 (Sh11,373). Petrol will cost $84 (Sh10,856), reduced from $90 (Sh11,631), while jet fuel prices will drop to $75 (Sh9,693) from $111.75 (Sh14,442).
The deal follows a request by the Kenyan government to lower Freight and Premium (F&P) costs, a key factor in determining domestic fuel prices. Gulf suppliers responded with significant cuts: $10 (Sh1,292) per tonne for diesel, $14.75 (Sh1,906) for petrol, and $6 (Sh775) for jet fuel.
Kenya’s Ministry of Energy hopes the lower premiums will make the country more competitive in regional fuel logistics while stabilizing domestic fuel prices. A litre of diesel currently sells for Sh167.06, with petrol at Sh176.58 in Nairobi—an increase from Sh180.38 and Sh179.15 respectively in March 2024.
The extended deal runs until December 2027 for diesel imports, with petrol and jet fuel arrangements concluding in February and March 2028. This timeline aligns with Kenya’s strategy to maintain fuel affordability and insulate consumers from market shocks.
The move also reflects a stronger Kenyan shilling exchanging at 129.24 units to the U.S. dollar allowing the government to capitalize on favorable forex trends and pass savings to consumers.
Kenya first entered the agreement with the Gulf firms in March 2023 after abandoning an open tender system. Under the new arrangement, nominated Gulf companies supply fuel to local importers on credit terms of up to 180 days. Kenyan firms Galana, Gulf, and Asharami & One Petroleum are currently handling distribution and retail.
The government emphasized that reducing premiums was essential, especially as global oil prices have been on a downward trend since last year. The cost relief is expected to have a broader economic impact, easing pressure on transportation and consumer goods prices.
According to government data, Kenya imported 6.23 million tonnes of diesel, 4.56 million tonnes of petrol, and 1.98 million tonnes of jet fuel highlighting the significance of a stable and cost-effective fuel supply chain.
As international markets remain volatile, Kenya’s move to lock in lower prices signals a proactive approach to shielding its economy and ensuring consistent fuel access for its population.
