The Kenyan Government is poised to exit the Government-to-Government (G2G) oil supply agreement initiated in April 2023. Initially launched by President William Ruto to stabilize the Kenyan Shilling against foreign currencies, the deal involved three national oil exporters from the Gulf.
However, according to a report from the International Monetary Fund (IMF), the Treasury acknowledges that the scheme has not yielded the anticipated results. Citing distortions in the foreign exchange (FX) market and an increased rollover risk in private sector financing facilities supporting the arrangement, the Treasury expressed its intention to discontinue the oil import arrangement.
The shift away from the open tender system where local companies bid for monthly oil imports marked a significant change.
Initially slated for a 9-month duration, the deal was extended for an additional 12 months concluding in December 2024. Following this deadline the government plans to withdraw from the agreement.
Since the launch of the scheme, the Kenyan Shilling has depreciated by over 20 percent against the US dollar surpassing the historical low mark of 160 to the dollar. The decision to exit the G2G oil supply deal underscores a commitment to exploring private market solutions within the energy sector.